Opportunities for Islamic finance in the UK

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The UK has provided Islamic financial services for over 30 years, and is a leader amongst Western countries in this field.

Islamic finance in the UK

At the end of 2012/13 the global market for Islamic finance was worth around US$1.3 trillion, with US$19 billion of reported assets in the UK. There are 716 Islamic financial institutions spread over 61 countries.

As the Islamic finance industry has developed the UK has created a market where Islamic banks and their clients are not treated any differently to their conventional counterparties. Initiatives include:

• removing double tax on Islamic mortgages
• extending tax relief on Islamic mortgages to companies as well as to individuals
• reforming arrangements for issues of debt In 2012 the UK was ranked the 9th largest country by Sharia compliant assets with more than 20 institutions offering Islamic finance and six wholly Sharia compliant banks. The UK already offers great growth potential to Islamic financial services:
• more than 20 international banks operating in the UK are working in Islamic finance, 6 of which are fully Sharia compliant
• British banks are increasingly active in the international Sukuk market
• UK domestic banks are expanding their Islamic finance offering to meet demand
• Islamic finance has helped transform London’s skyline by financing in whole or in part developments such as The Shard, Chelsea Barracks, Harrods and the Olympic Village.
• the UK has the largest legal services market in Europe and over 25 law firms with offices in the UK are supplying Islamic legal services
• there are 9 fund managers offering Islamic asset management services to their clients *all of the UK’s largest accountants, consultants and professional service firms have Islamic finance departments
• new standards and qualifications in Islamic finance are being offered by professional institutes, universities and business schools across the UK
• the London Stock Exchange has raised a total of US$34 billion through 49 issues of Sukuk
• the London Metal Exchange (LME) is an important avenue for the growth of Islamic finance globally - a significant volume of liquidity management transactions concluded by Islamic finance institutions and other Sharia compliant firms are supported by metals on LME warrant

The UK is proud to be hosting the World Islamic Economic Forum (WIEF) in October 2013. It is the first time the Forum has been held outside of the Muslim world. UKTI are organising a British Business Pavilion event at WIEF to compliment the main themes.

Investment opportunities in the UK

The key projects in the UK which currently need investment and development partners include:

• offshore wind: a potential investment programme in excess of £100 billion
• nuclear: up to eight individual sites with capital value per project of £8-9 billion
• offshore transmission: an investment programme of £15 billion to support offshore wind projects
• High Speed 2: a high speed rail line from London to the North with potential investment value estimate of c. £32 billion
• ports: opportunities for turbine manufacturing investment in support of offshore wind programme and opportunities to support post-Panamax container facilities
• Thames Tideway: new waste water tunnel with a capital value £4.2 billion
• Atlantic Gateway: a £75 billion regeneration and infrastructure development in North West England
• Olympic Park: £9 billion redevelopment following the 2012 London Olympics
• urban regeneration: a pipeline of over £100 billion of significant urban regeneration and development opportunities across the UK