Children pay for meltdown

Iceland's director of public health, Dr Geir Gunnlaugsson, has no doubt who was worst affected by the economic crisis that gripped the country 15 months ago - children.

There has been a surge in reports to child protection agencies tasked with monitoring everything from maltreatment to mental health and who have been on the alert for problems after the global financial crisis.

"We believe that there have been increasing strains in intra-familial relations - conflicts among parents, for example, but also pressures on family budgets - and that this in turn impacts on the children," said Gunnlaugsson.

His worries are echoed by others. "It's mostly about their psychological welfare. The children have also been asking: What is going on? What do we mean by the 'crisis'? What is going to happen?" said Professor Halldor Guemundsson from the University of Iceland.

The greatest concern of both experts is the impact long-term joblessness will have on a younger generation that has only known near-zero unemployment.

"Some groups have now experienced one whole year of unemployment and it's a totally new experience for Icelandic society, so we will probably suffer the impact of that on the welfare and mental health of the population," said Gunnlaugsson.

Against the backdrop of 8 per cent unemployment and rising, fears are growing of mass emigration by the young, particularly to Scandinavia.

Herdis Olof Kjartansdottir, 23, a business studies degree student at the University of Iceland, said: "I think it's very hard to be graduating right now, so there is the possibility of major migration. A cousin of mine has already moved to Norway with her whole family - her parents, her two siblings, her boyfriend and her son. They have all got jobs."

But Guemundsson said there were positive signs. "Children are spending more time with their parents. There is less overtime, people are at home more because things have slowed down or because they are out of work."

This situation is likely to worsen. A government scheme to prevent repossession of homes is due to end soon, threatening to cause widespread misery in a society saddled with huge levels of household debt.

Already charities providing free food are busier, receiving a record number of requests for assistance at Christmas. Aid from three of the biggest charities reached 10,000 people.

The impact of the debt burden faced by the Government threatens to erode Iceland's much envied Nordic-style welfare system.

Between 15 per cent and 20 per cent of households are believed to be in serious debt trouble, to the extent that they will need government assistance.

Even so, the financial crisis has benefited some. Reykjavik has seen a rise in the number of tourists from Britain as well as continental Europe taking advantage of the favourable exchange rate.

Fashionable clothes stores have begun stocking more home-produced products as imports become expensive.

But amid the lunchtime throng of tourists and locals at Cafe Paris, a bar in Reykjavik's old town opposite the square where thousands of demonstrators gathered night after night for a week last year, a note of warning is sounded.

"If no one goes to jail for what happened in this country then you will see it going up in flames," said its manager, Arnor Bohic.

A failure to have a reckoning for those largely blamed for bringing Iceland to its knees is one of the possible sparks some say could reignite a city at peace 12 months on from the Saucepan Revolution - so called because of the noise-inducing kitchenware brought along by protesters.

For now, hopes are high that there will at least be a reckoning for Iceland's economic woes, if not from a "truth commission" due to report within weeks, then from a criminal investigation into the activities of the discredited financial oligarchs.

"Given the enormity of this situation and what happened and what is already visible about the behaviour of some, one would guess that it is a very likely outcome that some people will be severely penalised or put to prison," predicted Iceland's Finance Minister, Steingrimur Sigfusson.

Inside his office, he sighed about the uncertainty the country now faces in the run-up to the referendum on March 3 triggered by President Olafur Grimsson's rejection of a bill to pave the way for repaying 3.4 billion ($7.7 billion) owed to the British and Dutch Governments after the collapse of the Icesave online bank.

"We succeeded in a lot of ways in 2009, and the outlook for 2010 was even better than we had expected," he said, "but the President's decision has put a question mark over what will happen next."

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