Negotiations with Iceland over the repayment of £2.3 billion in debts to the UK have broken down after representatives of the island nation walked out of talks in London.

The walk-out means that Iceland will next week hold a referendum expected to reject a deal for repayment of cash owed to Britain and the Netherlands as a result of the collapse of Landsbanki, the bank behind the Icesave internet savings account.

The UK and Dutch governments this evening said they were "disappointed" that no deal had been reached after 18 months of talks.

Sources close to the talks said that Iceland had been offered an advantageous new floating interest rate on the debt, based on Libor (London inter-bank rate) plus 2.75%, which would have represented a significant cut on the 5.5% currently being charged. Also on the table was the offer of a two-year interest holiday worth around £400 million. 25-Feb-10.

http://www.google.com/hostednews/ukpress/article/ALeqM5h-IemhTFfxXoYkXuBHzFy3ck0Nyg

GLENROTHES, Scotland (AP) — Prime Minister Gordon Brown's party won a hotly contested special election Thursday in Scotland, a sign that Labour's battered popularity is recovering.

The vote in the former coal mining town of Glenrothes is the first since Brown launched an unprecedented and widely praised bailout of some of Britain's leading banks last month. Associated Press website - 07-Nov-08.

http://ap.google.com/article/ALeqM5jgODpnaZZ4RdXVQbQqNcmEVlNSUgD949PJ500