Mr Grimsson told Sky News: “The Gordon Brown government decided, to its eternal shame, to put the Icelandic government on a list of terrorist states and terrorist phenomena. We were there together with al Qaeda and the Taliban on that list.

Sky News reported an EFTA court is due on Monday to give a legal verdict as to whether Iceland’s actions were appropriate, however Mr Grimsson said that this will only be advisory, and that “it will not lead to any financial obligations or transactions of any sort”.