ENFIELD Council is expecting to recoup all money it invested in Icelandic banks before the 2008 crash.

Heritable Bank went into administration in October 2008, putting in peril £5m the authority had deposited earlier that year.

However, having already recouped £3.4m, it has today said it expects to get back 90 per cent next year and the full amount “eventually”.

Councillor Andrew Stafford, who is in charge of finance on the council, said: “This is good news during the current difficult financial period and means the impact of the unprecedented government spending cuts on our front line services are likely to be less than they may otherwise have been.”

The investment in Iceland's banks by Enfield Council was mirrored by public bodies across the country, at a time when the country's financial institutions were given top-level AAA ratings by financiers.

However, the system collapsed amid a spiraling debt crisis, plunging Iceland into recession and putting more than £840m of British taxpayers' money at risk.

However, Kent County Council, which invested the most in Iceland of all the UK public bodies, was named a preferred creditor by the Icelandic Supreme Court last week, meaning it is likely to recoup most of the £50m it deposited.

That local authority will now lead negotiations on behalf of the UK to get the money back.