While the krona in Iceland still has its staunch defenders, voices demanding its demise in favour of the euro grow louder by the day.

With interest rates at a record high of 15 per cent, a slippery housing market and food and petrol prices increasing, it seems that the good times are at an end.

“We’ll be up and running by autumn,” Geir Haarde, the Prime Minister, said on television this week. As for speculation on the future of the krona, there is a hitch: Iceland is not a member of the European Union.

The possibility of EU membership is still merely at the stage of early discussions. “[It is] an issue we’ll have to look into,” Ingibjorg Solrun Gisladottir, the Foreign Minister, said.

There are those who have faith in the krona. Last week a gang of criminals from Eastern Europe was apprehended at Keflavik international airport with suitcases bulging with several million Icelandic kronas. The loot was the result of a highly organised weekend raid on Icelandic cash machines. What everyone wanted to know is where on earth the gang planned to change the notes into a more usable currency.

Iceland’s so-called economic miracle of recent years, with its invasion of the British retail business, has meant fewer blank expressions abroad, especially in a financial context. But now that the bubble might be about to burst, the response in Iceland is disbelief. Davio Oddsson, a former Conservative prime minister who is the head of Iceland’s central bank, talks cryptically of “outside forces” raiding the Icelandic economy, while Vilhjalmur Egilsson, the director-general of the Confederation of Icelandic Employers, ticks off the central bank for upping the prime rate.

To the ordinary Icelandic family, the question of where to lay the blame is immaterial. In a country where parents already spend far too little time with their offspring, the question of how to squeeze in a third or fourth job to stay afloat is far more pressing.

Such a family might have taken on a 100 per cent mortgage when, a few years back, the banks burst into the housing market with no-holds-barred loan offers. Now they might be seeing the back of the expensive car they bought on similar conditions and are cheering on the lorry drivers who stage daily, noisy, protests outside parliament and on the road to the airport, railing against the rise in petrol prices. They are squirreling away dry goods, such as wheat and sugar, too, and counting the rising cost of milk products, which have climbed sharply.

Yet if Icelanders weren’t a nation of plucky optimists, their country would never have been inhabited in the first place. The chances are they’ll be up and running again soon.

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