Iceland has not only rejected talks with the EU on membership, but it has also created a pathway for the UK. In doing so, the country remains part of the single market without joining the EU in full. It has also confirmed that the EFTA club is not a waiting room for potential EU members, but an independent group of countries that overwhelmingly supports maintaining their current position.

This is not the first time an EFTA country has rejected EU membership. Norway voted no to EEC membership in 1972 and EU membership in 1994, and now Iceland has voted no to talks in 2026. Importantly, Iceland just rejected this on any terms the EU would or could have offered, knowing they would remain on their existing deal after the referendum.

The case of Iceland is particularly interesting given the current context. The claims made by Trump on Greenland have created insecurity in the region. That and some campaigners supported a yes vote in order to see what was offered by the EU. Even that was not enough to open negotiations.

Perhaps the key issue for Iceland was fishing and membership of the Common Fisheries Policy. As a member of the EFTA+EEA agreement, Iceland can access the single market while retaining an opt-out from the Common Fisheries Policy. This does not prevent Iceland from striking individual fisheries deals, but it does mean it keeps full control over who fishes its waters and on what terms, control it may lose under full EU membership.

Sovereignty is also a factor that should not be underestimated. Membership of the EU would have required a move towards political integration, even though Iceland, as an EEA member, already adopts much of the single market legislation.

The say EFTA+EEA countries have is also a reality for Iceland, not just a debate. EFTA countries do have a say in global bodies where much of the single market legislation originates. Where they retain their independent veto on global bodies, they have access to safeguard measures which can be used on the four freedoms, and Iceland has used in the past on capital, a veto over new laws, although this can come with retaliation. Perhaps most important is that for these countries, this relationship is about trade and is much more equivalent to a trade deal than EU membership would be.

It is a relationship these countries pick over EU membership for a reason; whilst their agreement is often misunderstood as “Pay no say” in the UK, the “No say” aspect is untrue. It is a clear balance between sovereignty and trade, one which these countries have balanced successfully.

For Iceland, the result is clear: even to negotiate, the answer is no. For the UK, this is significant too. A yes vote would have paved the way to shrink the EFTA plus EEA group from three members to two, making the arrangement considerably less appealing. Instead, the result strengthens the bloc; the trajectory for Iceland remains firmly outside the EU.

More broadly, EFTA looks unlikely to go anywhere soon, and for the UK it offers an alternative to a debate too often framed as a choice between rejoining the EU or a distant relationship.

Just like Iceland, we could have economic integration without many of the political aspects of EU membership the public rejected. This may be the moment to reconsider whether, given how popular this arrangement has proven among its existing members, we should look again at membership of the EFTA plus EEA club. My answer is yes, and the result in Iceland only reconfirms it.