Britain is home to 22 Islamic banks, of which six are fully Sharia-compliant. This is substantially more than in any other Western country or offshore center and is more than double the number in the United States.
In addition, 25 law firms are now supplying services in Islamic finance, which is increasingly being used for major infrastructure projects in London.
Islamic investment has financed London’s Shard skyscraper — the tallest building in the European Union — and the 2012 Olympic Village. Middle Eastern investors own Harrods, London’s most famous luxury department store, and the Manchester City football team.
Qualifications in Islamic finance are being offered by four professional institutes and at least 16 universities and business schools.
London is also a leader in Islamic retail banking services, with institutions offering a range of Islamic banking products, such as mortgages and car loans.
The growing demand for Islamic retail banking services is being propelled by the demographic transformation taking place in Britain. The Muslim population of Britain will top 3.3 million sometime before the end of 2013 to reach around 5.2% of the overall population of 63 million, according to figures extrapolated from a recent study on the growth of the Muslim population in Europe.
This demographic earthquake — which is being attributed to large-scale immigration, coupled with high Muslim birth rates and growing numbers of British converts — is transforming the country’s business landscape.
More than one-third of all small- and medium-sized companies in London are believed to be Muslim-owned, and British Muslims contribute at least £30 billion to the economy, according to a new report published by the Muslim Council of Britain.
The demographic changes are also contributing to the establishment of parallel Islamic financial and legal systems in British public life.
In 2012, the British government began offering Muslim workers a Sharia-compliant pension fund in the public sector. A new government agency, the National Employment Savings Trust (NEST), will give Muslims who do not already have a company pension the option of investing in the HSBC Life Amanah Pension Fund, a Sharia-compliant pension scheme. The initial target market comprises some 200,000 Muslims in Britain.
In June 2011, Pointon York, an independent financial services company based in Leicestershire in central England, announced that it will begin offering four Sharia-compliant Self-Invested Personal Pensions (SIPP) products that comply with Islamic law.
Pointon York was the first specialist SIPP provider to receive Sharia-compliant accreditation by the Islamic Bank of Britain (IBB), which has pioneered Islamic retail banking in the United Kingdom. The IBB will supervise the entire life-cycle of Pointon York’s pension funds to ensure full compliance with Sharia legal principles.
Muslim families in Britain can already acquire Sharia-compliant baby bonds under the British government’s Child Trust Fund scheme. In 2008, Britain’s Financial Services Authority (FSA) authorized the establishment of the country’s first Islamic insurance company as well as the country’s first Sharia MasterCard, called the Cordoba Gold MasterCard.
In addition, takaful, a type of Islamic insurance, reached a new high in 2012, with premiums estimated to have reached around $30 billion, according to The City UK, the financial services lobby group.
PM Cameron told the economic forum that Britain has also taken steps to ensure that Muslims are not discriminated against by implementing measures ending “double taxation” on Islamic mortgages and introducing alternative forms of student and start-up loans to comply with a ban on interest payments. “Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan simply because of their religion,” he said.
But some are saying that Britain should go even farther in aligning its financial system with Sharia law. In an interview with the newspaper London24, Jodie Ginsberg of Demos Finance, a financial services research firm, said: “David Cameron is right to throw Britain’s doors open to the Muslim world to showcase our trading wares. But we should also use this forum as an opportunity to consider how the principles of Islamic finance itself, not just the money generated in the Muslim world, might be applied in the UK. Islamic finance is one of the few models successfully to have weathered the 2008 credit crunch and its aftermath.”