Islamic finance: Creating stability in the UK economy
The UK economy is in a position of uncertainty, with the outcome of Brexit still unclear and the wider impacts still relatively unknown. In order to minimise economic disruption, the UK must try and keep on good trading terms with Europe, but also expand its economic ties with the Middle East.
The country’s current pragmatic approach to investment in Islamic finance is a good basis for this, as Islamic finance partner Mohammed Saqub and real estate finance solicitor Ishteyak Hannan explains:
The UK as a global hub
At a Sukuk conference in 2018, it was stated that the UK has potential, post-Brexit, to become an attractive destination for Islamic finance and future investment. According to the president of the Saudi Arabia-based IDB, London has the financial, regulatory and legal experts needed to develop the UK into a successful global hub for Islamic finance.
Issuing sovereign Sukuk
After strong demand, 2014 saw the UK become the first European country to issue sovereign Sukuk. The demand for Sukuk was 10 times oversubscribed, showing a solid market in Britain for Islamic finance. Therefore, a Treasury spokesman has claimed they intend to reissue the bonds when they mature later in 2019. This reissuing could attract attention from investors overseas, adding much needed stability to the UK’s economy.
Shariah compliant banks
In the UK, there are currently five fully Shariah-compliant banks and over 20 others that offer a level of Islamic banking. There are approximately £500 million worth of Islamic funds, which between them have hosted 65 Sukuk worth £35 billion.
Brexit must not hinder the development of the UK’s Islamic finance ambitions. Instead, it is essential that the country takes an open-minded stance and acts on the opportunities that Islamic finance brings.
Investors in the Middle East are still keen on UK real estate and our robust legal system means investing here is a safe option. Many aim to hold onto their assets in the UK, and are still hopeful that these assets will perform well, even after Brexit.
Utilising Islamic finance during this period of uncertainty could be a positive move for Britain. Building strong relationships outside of the EU will be vital to maintaining some form of stability for our economy.