The City’s top lobby group is urging the Government to make sure any laws introduced post-Brexit do not dent demand for Islamic finance as enquiries from banks to set up Shariah-compliant services soar.
TheCityUK, which represents Britain’s banks and financial institutions, has sent a 32-page report to the UK Government that assets of UK firms offering Islamic finance services surpassed $5bn (£3.8bn) in 2016, up 11pc in two years.
Eager to safeguard the sector’s growth at a time when London is fighting to retain its status as Europe’s financial hub, the group is calling on the Government to “make sure legislation is in place so that corporate Sukuk’s [Islamic bonds] can thrive,” said Wayne Evans, the group’s adviser in international strategy.
“We’re looking to keep lobbying, talking to HMG [Her Majesty’s Government], to make sure they are aware of the demand,” Mr Evans told The Telegraph. “Enquiries are certainly going up [but we] need to make sure new legislation being introduced [post-Brexit] doesn’t have an implication on Islamic finance.”
Britain was the first non-Muslim country to sell a bond that can be bought by Islamic investors, drawing over £2bn in bids when it issued the sovereign Sukuk in 2014. At the time, former chancellor George Osborne said promoting the industry, now worth over $2tr, could make Britain “the undisputed centre of the global financial system.”
While the UK’s status as a global financial hub is at risk due to Brexit - London’s lucrative euro-clearing market is under threat and the City is expected to lose as many as 40,000 sales, trading and investment banking jobs - Mr Evan’s said the move could encourage Islamic-compliant investment into the UK, provided new rules don’t end up limiting growth.
“If we see more trade with non-EU countries, and encourage more trade with them, then obviously having expertise and a Sharia-compliant string to your bow has got to be an advantage,” he said. “If the UK financial system is going to be more interested in Malaysia, say, then we have been in the past, then there will be more interest in Islamic finance.”
Stephen Barclay, the economic secretary to the treasury and a former Barclays anti-money laundering director, will be among a string of senior executives discussing the Islamic finance industry in London this week.