A new report from TheCityUK, in partnership with DDCAP, underlines the UK’s status as the leading Western centre for Islamic finance, with UK-based Islamic finance banking assets ($7.5bn in 2021) making up 85% of total European Islamic finance banking assets, the most of any single European country (bar Turkey) and significantly greater than other Western countries, including the US ($636m).
The ‘Islamic finance: global trends and the UK market 2022’ report also highlights the UK’s position as a Western leader in Islamic FinTech – a status stemming from its solid base as a global FinTech leader; strong regulatory support; its active talent pool of professionals with Islamic finance expertise; and growing Muslim population. The UK’s supportive tax and policy environment also makes it attractive for Islamic finance providers.
The London Stock Exchange (LSE) has become a global hub for sukuk listings: 68 sukuks are currently listed, with over $50bn raised. The UK is also one of the world’s largest providers of Islamic finance education – fifth globally by total number of Islamic finance-focused degrees, qualifications and courses provided.
Global Islamic banking assets totalled $2.8trn in 2021, up from $1.7trn in 2016, with assets forecast to reach $4trn by 2026. In the UK, total assets under management of UK-based Islamic funds were $19.6bn in 2021 across 37 active funds.
Miles Celic, Chief Executive Officer, TheCityUK, said, “The UK’s strength in Islamic finance is an important part of its status as an international financial centre. Its long-term positioning as a hub for Islamic finance, education provision, and strong talent pool in areas such as fund management and FinTech have helped to create a supportive ecosystem for the sector, in particular for the burgeoning area of Islamic FinTech.
“With expectations that Islamic finance assets under management will double over the next decade, the UK is well placed to grow its own market and further cement its status as the leading Western hub. We look forward to working with government and regulators to take advantage of this opportunity over the coming years.”
Stella Cox CBE, Managing Director, DDCAP, said, “The UK’s position as the leading western hub for Islamic finance activity has been driven by private-sector initiatives and enabled by supportive government policy and a desire to create a level playing field for Islamic finance. The sector has also been able to build on the UK’s strengths as a FinTech leader to make big strides in Islamic FinTech and is becoming recognised as an innovator of products and solutions aligned to the ESG agenda that are increasingly prioritised by global banking and finance communities.
“With a solid base from which to further grow, government, regulators and industry should continue to work closely to maintain the UK’s unique position in Islamic finance.”