A TOTAL of £2m feared lost in the Icelandic banking crisis looks like being returned to Ealing council taxpayers.

Until February 2008, the borough invested with Icelandic bank Glitnir until it collapsed later that year.

Ealing, and 123 other councils, fought a legal battle which led to this month’s ruling by Iceland’s Supreme Court that British local authorities would be among the first creditors to be repaid.

The Local Government Association co-ordinated the legal challenge, and authorities such as Kent County Council, which had £50m at risk, were used as test cases.

Ealing, like many other local authorities, had funds with Icelandic banks due to favourable interest rates, which later proved to be unsustainable.

The banks buckled under the pressure of re-financing short-term debt and run-on deposits and collapsed.

Ealing’s ‘lost’ investment is dwarfed by other cases. Havering, for instance, is owed £12m.

Borough cabinet members will consider how the recovered funds should be spent.

Ealing will welcome the cash return to help towards its £30.8m savings target.