There could hardly have been a more unlikely victim of the financial crisis than a country of about 350,000 inhabitants – equivalent to the population of Bradford – occupying a volcanic island midway between Europe and North America. But we need to diversify further to make the economy more stable.” Sigurður Hannesson, director general of the Federation of Icelandic Industries, says: “Historically we had fishing, now we have tourism. Touring a room with thousands of box-sized supercomputers – LEDs blinking and cooled by the arctic wind, each consuming more energy from geothermal and hydroelectric power than the average household – would suggest quite a lot has happened in a decade. Ten years since the collapse of the Icelandic economy, the country’s government has invited the Observer to see how things have changed. The price of cod used to push the króna around even before the hot money from the banking industry arrived now it’s visitors arriving at Keflavik airport, next to the shimmering, sulphurous Blue Lagoon, that shift it. But there are fears the economy could bubble out of control once more as tourist money floods in, pushing up the value of the Icelandic króna – which is among the most volatile free-floating currencies in the world, given the tiny population behind it.
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