When the global economic crisis hit in 2008, Iceland suffered terribly—more than most other countries. The savings of 50,000 people were wiped out, plunging Icelanders into debt and placing 25 per cent of homeowners into mortgage default.
Now, less than a decade later, the nation’s economy is booming. This year it will become the first culturally European country that faced collapse to beat its pre-crisis peak of economic output. That’s because it took a different approach.
Instead of imposing devastating austerity measures and bailing out its banks, Iceland let its banks go bust and focused on social welfare policies. In March, the IMF announced that the country had achieved economic recovery "without compromising its welfare model" of universal health care and education.