James Kirkup, and Rowena Mason
London Telegraph 
Saturday, Oct 11, 2008
The war of words between Britain and Iceland has intensified as Iceland’s prime minister accused Gordon Brown of undermining his country’s economy.
Geir Haarde also confirmed that Icelandic creditors will get priority over British customers as the country’s fallen banks’ money is returned.
British savers and companies and a growing range of public bodies all have billions of pounds potentially trapped in collapsed Icelandic banks.
The prospect of that money being lost this week drove Mr Brown to publicly threaten retaliation against Icelandic firms and question the country’s economic prospects.
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At a press conference in Reykjavik, Mr Haarde said Mr Brown’s outspoken public threat to seize the assets of Icelandic companies was “illegal.”
He said that the British Government’s assessment of Iceland’s prospects had fuelled the collapse of the country’s currency.
Iceland’s banking collapse is threatening its entire economy, and the country is widely expected to seek financial aid from the International Monetary Fund in the coming days.
Mr Haarde said:”The remarks made by Gordon Brown were unfortunate and dispiriting. It was not very helpful to say that our country is virtually in default, which is not a true description. The suggestion was not helpful to us as far as the markets were concerned today.