Gatehouse Bank has published a report containing four leading recommendations for the UK government to level the playing field between Islamic and conventional finance, enabling further growth in the sector.

The report, presented today at an event at the House of Lords, highlights the significant expansion of Islamic finance worldwide, with total assets projected to increase from £140 billion in 2003 to £3.2 trillion by 2030.

Previous research from Gatehouse Bank revealed that 88% of UK consumers of the Muslim faith and 30% of UK consumers not of the Muslim faith would consider switching to an Islamic finance provider.

Drawing on insights from comparable markets such as Africa, Australia, Canada, the EU, the UAE, and the US, the report outlines four key policy recommendations:

• Establish a government-led Islamic finance taskforce – A taskforce should be created to identify areas of growth, facilitate inward investment, and attract international investors seeking sustainable finance options.
• Attract new Islamic finance entrants – The government should remove barriers that disadvantage Islamic finance compared to conventional finance, such as increasing the Bank of England’s Alternative Liquidity Facility to better accommodate the needs of Shariah-compliant banks.
• Develop a cohesive UK government strategy on Islamic finance – This would ensure alternative finance structures are considered when formulating financial policy and introducing new legislation.
• Foster global collaboration on Islamic fintech – With the UK already home to the largest number of Islamic fintech firms outside the Middle East, a stronger international network would allow further growth in this sector.

The report states that UK’s Islamic finance market is forecast to grow by 16.5% over the next five years, rising from £6.1 billion in 2024 to an estimated £7 billion by 2029. Britain already has over 20 financial institutions offering Islamic finance products, including five fully Shariah-compliant banks, more than any other Western country.

Charles Haresnape, CEO of Gatehouse Bank, emphasised the need for government action to help the UK realise its potential as a leading centre for Islamic finance: “Our research shows that the UK is already well-placed to become the Western capital for Islamic finance. However, achieving that goal requires a government commitment to placing alternative finance, including Islamic and ethical finance, on a level playing field with conventional finance.

“The development of Islamic finance is not just a niche within the UK’s financial services sector – it is a marker of the country’s ability to foster ethical innovation and inclusive growth. Ultimately, strengthening the UK’s Islamic finance sector will attract international investment and enhance financial inclusion, ultimately driving innovation and competitiveness in the wider financial services sector.”