Despite a second unsuccessful repayment referendum last weekend, President of Iceland Olafur Ragnar Grimsson has today said that investments by the UK and Netherlands in Icelandic banks would be paid back.

The two countries lost a total of £3.5bn when Iceland's entire banking system collapsed in October 2008. The main bank, Landsbanki, gave high interest rates to their investors and operated under the name Icesave. Almost half a million citizens were later returned their money by the British and Dutch governments, with Iceland expected to reimburse the sum at a later date.

Speaking on BBC Radio 4's Today proramme, President Grimsson said: "The first payment will be this December, and in all likelihood this will cover what was paid by Britain and the Netherlands two years ago."

He did, however, voice the concern "that ordinary [Icelandic] people should shoulder the responsibility" - saying it was "highly doubtful and definitely [would be] disputed within the European legislative framework."

The UK announced that the matter would continue to an international court.