Icelanders stage protest as economy set to worsen

Business Materials 30 November 2008 20:27 (UTC +04:00)

Several thousand people in Iceland over the weekend braved freezing conditions to protest against the government as the effects of the economic crisis continued to unfold, reports said Sunday, dpa reported.

Similar protests have been held in recent weeks with calls for the prime minister and central bank governor among others to resign.

Refusing to resign, Prime Minister Geir Haarde say he would continue efforts to stabilize the economy.

The North Atlantic nation is in for a tough year in 2009 as the economy is expected to shrink by 10 per cent, unemployment to quadruple, and inflation to hit 20 per cent.

Recent central bank figures for November have inflation at 17 per cent.

Possible options that Haarde's Independence Party may seek include applying for membership in the European Union. The party has traditionally been a sceptic toward the 27-nation bloc, but a reassessment has been forced in the wake of the global credit crunch that in October contributed to the collapse of Iceland's three major banks.

Coalition partner the Social Democratic Alliance party is more favourably inclined toward EU membership.