Iceland edged further towards the margins of the global economy yesterday when McDonald's announced the closure of its three restaurants in the crisis-hit country and said that it had no plans to return.

The move will see Iceland, one of the world's wealthiest nations per capita until the collapse of its banking sector last year, join Albania, Armenia and Bosnia and Herzegovina in a small band of European countries without a McDonald's.

The loss of the Golden Arches highlights the extent of Iceland's economic demise since the pre-crisis boom years when its “Viking Raider” entrepreneurs turned Reykjavik into an international finance centre and launched a buying spree of high-profile European assets.

McDonald's blamed the closures on the “very challenging economic climate” and the “unique operational complexity” of doing business in an island nation of just 300,000 people on the edge of the Arctic Circle.

Most ingredients used by McDonald's in Iceland are imported from Germany – leading to a doubling in costs as the krona has collapsed while the euro has strengthened.

Magnus Ogmundsson, managing director of Lyst, the McDonald's franchise holder in Iceland, said that price rises of at least 20 per cent were needed to produce an acceptable profit. That would have pushed the price of a Big Mac burger well above the $5.75 it costs to buy one in Switzerland, home to the world's most expensive McDonald's, according to the Big Mac index.