The European Union put on a brave face on Sunday in response to the Icelandic vote against resuming EU accession negotiations, but the result is no doubt a big blow to Brussels and a boon for eurosceptics.

The EU "fully respects the democratic choice" of Icelanders, the European Council President António Costa told Iceland's Prime Minister Kristrún Frostadóttir following the announcement of the referendum results.

The North Atlantic island is already closely linked to the EU as a member of the European Economic Area (EEA) and the Schengen area. The two leaders pledged to "continue to strengthen this relationship."

However, dismay was palpable in Brussels.

"The takeaway is clear: the EU today no longer inspires dreams," said Green MEP Saskia Bricmont.