Britain is leading the West in Islamic finance, according to a new report.
The UK is the fourth most significant centre for Islamic finance among non-Muslim-majority nations - after Singapore, Sri Lanka and South Africa. The UK could take a leading role in setting international Sharia compliant standards.
More than 20 banks across the country offer Islamic finance services – more than double the number located in the US. Five banks in the UK are fully Sharia compliant.
The report from TheCityUK, the representative body for the UK-based financial and related professional services industry, found that globally the market for services in the sector increased 7.5% year on year in 2015 to a record $2trn worldwide.
In Britain, TheCityUK estimates that assets of UK-based financial institutions offering Islamic finance services reached more than $5bn in last year.
"The Islamic finance sector is a rapidly expanding part of the global financial system. Currently, Sharia compliant assets make up just 1% of global financial assets, yet around one in four of the world population is Muslim. There is enormous potential for further growth. Given the UK's position as a world-leader in innovation and development within the sector, we're well-placed to capture this opportunity," explains Miles Celic,chief executive of TheCityUK.
The report also found that the UK has become the leading centre of Islamic finance education and training globally. It is also increasingly a centre of innovation and development for the use of financial technologies in Islamic finance products.
A number of projects across the UK, including the Shard building and the Olympic Village in London, as well as over 6,500 new homes outside the capital London, have involved Islamic finance in a significant funding role.
“Infrastructure development is a key area where greater use of Islamic finance instruments could be encouraged. Current trends suggest that this will continue to grow in the years ahead,” said Mr Celic.
The UK was the first Western nation to issue a sovereign sukuk (Islamic bonds). Today, a total of 65 sukuk have been listed on the London Stock Exchange with a total value of $48bn.
The growth of the UK’s Islamic finance sector has been supported by the country’s government. Two years ago, Tobias Ellwood, under secretary of state at the Foreign Office, told UK press that the government aimed to make Britain the leading nation in Islamic finance.
The growth in this sector could be of sizable benefit to the country, whose economic future many are uncertain of.
"It's difficult to say that Islamic finance will be the answer to everything, although what I think we can safely say is that it had been government policy to place London alongside Dubai as an international Islamic financial capital," Jason Chuah, Professor of Commercial and Maritime Law at The City Law School, London, said earlier this year when discussing the post-Brexit economic climate in the UK.