Prime Minister David Cameron has pledged to make the UK a centre for Islamic finance, and says Britain intends to be the first country to issue an Islamic bond outside the Islamic world.
Cameron said the Treasury is working the practicalities of issuing a sukuk, or bond style investment vehicle, worth about £200m. Sukuk bonds do not pay interest but instead entitle investors to a share in the returns generated by an underlying asset, such as property, making them compliant with Islamic financial law. The new sharia-compliant gilt will enable Britain to become the first non-Muslim country to tap the growing pool of Islamic investments that is forecast to top £1.3 trillion by next year.
Speaking at the World Islamic Economic Forum in London, which has never been held before in a non-Muslim country, Cameron said: 'When Islamic finance is growing 50% faster than traditional banking and when global Islamic investments are set to grow to £1.3 trillion by 2014, we want to make sure a big proportion of that new investment is made here in Britain.'
The value of Sukuks already listed on the London market has reached $34bn (£21bn) over the past five years with nearly 50 bonds quoted by the London Stock Exchange. More than 20 banks currently offer Islamic financial products and services in the UK, more than any other Western country, with the number expected to grow further.
Sharia-compliant funds have already been used to fund some of the capital's largest developments, including the Shard and the Olympic Village.
At the same meeting, Bermuda's Premier Craig Cannonier also signalled plans to become a leading Western destination for Islamic finance. The country has established partnerships with the financial centres of a range of Muslim countries, as well as having a double taxation agreement with Bahrain and Qatar.
Cannonier said: 'We are at the World Islamic Economic Forum to continue the talks and further the relationships that were established two years ago when we first announced our becoming a Sharia-compliant financial hub.'
