You won't find many signs of severe economic distress on the streets of Reykjavik. The Icelandic homeless never sleep outdoors, not in summer or in winter. There are accommodation centres for men, for women, and also for couples. The serious difficulties of those losing their homes because of a 100% increase in the cost of servicing mortgages have yet to make themselves visible: the banks have been ordered to transform defaulting home owners into tenants, which allows their children to remain in local schools, and prevents panic selling on the real estate market, which would further force down prices. However, the crisis has had a very real influence on spending power, on the projects that people have been forced to set aside, and on the national mentality.

In a country which believed itself to be an impregnable haven of prosperity, the banking crisis came as a severe shock. In the autumn of 2008, Iceland's three main banks collapsed. The krona went into free fall and the government was obliged to ask the International Monetary Fund (IMF) and its European neighbours for help. In 2009, the island's economy shrank by 8%.

Iceland is a young country with a capacity for rapid change, and a population which is highly adaptable. The lives of natives of the island often encompass what might be three or four lives elsewhere. The phenomenon is so common that sociologists have great difficulty in establishing statistics. For example, it is impossible to define a profile for fishermen, because the fishermen rarely stay in the business all their lives. They fish and then do something else, or they are fishermen and do something else.

At 58, Halldor Arnason, who has been a fisherman for 40 years, is looking to diversify. A keen amateur historian, he is eager to tell the story of French fishermen who were a feature of his fjord, Patreksfjördur, in the earl 20th century. However, his plan to organize guided tours came a cropper last summer when his boat broke down. Two years ago, he would have had it repaired in England or Poland, but in the wake of the crisis, it was cheaper to have fixed at home. In this field, as it is in others, Iceland is steadily relocalizing.

Ruined wealthy — the new losers

The devaluation of the krona has brought a new buoyancy to the national fish market, and mining for coral sand (used in waste water treatment) has opened up employment opportunities in neighbouring fjords. The backers of a local mussel farm, which is still at an experimental stage, are hoping to take advantage of a market niche created by a European ban on summer mussel harvesting. The many Poles, who work in the fish processing industry, are integrating with the local community. There are buyers for empty houses, and rural areas that were in decline are now making up for the decades in which they trailed behind the island's cities.

Meanwhile, an atmosphere of nervous gloom has descended on Reykjavik and its suburbs. In a devastated economic environment, where only 11% of companies can do without support volunteered by the country's nationalized banks, people have been forced to accept radical change. In some cases, the tables have been turned. The ruined wealthy — or soon to be ruined wealthy — have become the new "losers," while the chipper mood of the lowly rank and file who have been granted a new equality by the crisis, is in marked contrast to the prevailing winter despondency.

Referendum or not, the debt must be paid

There are those who worry about rising unemployment, and those who are focused on another obstacle looming in the future: the reimbursement of the billions deposited by the English and the Dutch in the online bank Icesave, which the Icelandic state had the misfortune to guarantee. The government has already signed two agreements with other countries participating in the financial rescue operation to settle the debts of the failed bank. And on both occasions, these deals have been rejected: first by the Althing (the Icelandic parliament), and second by President Olafur Ragnar Grimsson, who proposed to submit the question to a referendum planned for 6 March — a vote that all the political parties claim to want and at the same time dread.

After months of parliamentary debate and headlines in the media, a poll found that most people in the country do not understand much about the issue. And right now the political mood has swung in favour of nationalists and populists, who have found an illusion of restored dignity in the rejection of Europe. But referendum or not and regardless of the outcome of the vote, all of the debt, or at least a percentage of it, will have to be paid.

Iceland is waiting

As soon as you leave Reykjavik, the sight of the island's spectacular landscape banishes all thoughts of the ongoing economic catastrophe. But pull into a garage and the surge in petrol prices will soon bring you back down to earth. In Hveragerdi and Selfoss, hundreds of unsold secondhand four-wheel drives are still waiting for unlikely buyers. People leaving the country on board car ferries are obliged to prove that they have paid off their car loans. Some prefer to quite simply ditch their vehicles.

For Stefán Jónsson, who lives near Flúdir where he manages a 600-hectare farm, there is no question but that Iceland will overcome its current malaise. Like the fishermen, he is opposed to entry into the European Union, which would mark the end of national government support for agriculture. But at the same time he acknowledges that he is better off than his countrymen who live in cities, in particular those who work in the building industry: Johann a tiler is now unemployed, house painter Hilmar has given up his profession, and Fridrik, a landscape gardener, has no more customers.

Iceland is waiting. It is waiting for former judge Eva Joly, adviser to Iceland's special prosecutor investigating the banking crisis, to find money hidden in tax havens. It is waiting for some good news: a buyer for its cheap energy, another loan from the IMF, a break in the clouds. Only one thing is certain: the days are getting longer.