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Local councils lose millions to Icelandic crash

It has been announced that hundreds of millions of pounds of local council funding was held in bank accounts connected to Iceland meaning that there is a chance that it will all be lost after the crash in the country's financial sector. The Icelandic authorities have made good savings for nationals but as yet there has been no word on the various overseas divisions connected to the country's banks - all of which were nationalised a couple of days ago.

So what are the consequences for the UK tax payer?

While so far the local authorities with exposure to Icelandic banks have refused to confirm or deny what the future holds, there is likely to be a cut in local services or an increase in local taxes. However, this episode has also highlighted exactly how much money the local authorities have in savings accounts at the same time as increasing council taxes for millions of people around the UK.

Many believe that either way the UK tax payer will have to foot the bill as these local authorities are pushing for the government to reimburse the funds they may lose, at the overall expense of the tax payer. A lose lose situation for the tax payer seems almost certain!

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