Hildur says Iceland can manage its economy without the EU

In an opinion article published by Morgunblaðið, Independence Party MP Hildur Sverrisdóttir argues that Iceland can manage its economic affairs at home and that the government should focus on inflation and interest rates rather than pursuing European Union membership talks.

The Central Bank has raised its key interest rate again this year, to 8 per cent. In its reasoning, the bank pointed among other things to the impact of higher public charges on inflation. Sverrisdóttir recalls promises made by the current prime minister before the autumn 2024 election that there was a plan to bring down interest rates and inflation.

She argues that the government has failed to manage the task and is now suggesting that the solution may lie in Iceland’s EU process. Before the election, the prime minister said EU membership would not be a priority and would not be used to “fix a poor economic situation”, Sverrisdóttir writes.

Sverrisdóttir criticises supporters of membership, including the European Movement, for arguing that Icelanders cannot manage their own economic affairs. She says the Icelandic króna is routinely blamed for economic challenges because of its small size, while the consequences of poor economic management are overlooked.

According to Sverrisdóttir, the period from 2014 to 2020 shows that Iceland is capable of managing its economy, citing price stability and moderate interest rates during those years. After a series of shocks, authorities spent what was necessary to protect households and businesses. Inflation was falling and interest rates had begun to decline before the new government took office and changed course, she writes.

She says it is irresponsible to devote the government’s energy to exploratory talks with Brussels instead of bringing inflation under control and supporting lower interest rates. The economic problems, she argues, are home-made and can only be solved by the government itself in Iceland, rather than through EU membership talks.