Islamic finance could deliver nearly £2.5 billion a year in savings and income for the UK, more than the £2.3 billion expected from the Australia trade deal.
Britain’s Islamic finance sector is already worth around £6 billion, part of a global industry that has grown by more than 20% in recent years.
Demand reaches well beyond Muslim communities. 30% of people who aren’t Muslim would switch to ethical Islamic finance options if they matched conventional products.
Islamic finance is one of the clearest economic opportunities hiding in plain sight. Britain is already the leading centre for Islamic finance in the West, yet the sector’s full potential remains untapped.
The UK sector is worth around £6 billion and holds 85% of Europe’s Islamic finance assets, supported by a growing ecosystem of banks and FinTechs. Demand runs well ahead of supply, and it is not confined to Muslim communities: a significant share of non-Muslims would switch to comparable ethical, non-interest products, and British Muslims are already helping drive wider demand for green and ethical finance.
Drawing on national polling and 31 expert interviews, this report sets out how, with the right policy support, Islamic finance could deliver nearly £2.5 billion a year for the public finances, widen access to pensions, student finance and home ownership, and attract major investment into British infrastructure.
“This work makes a compelling case for recognising Islamic finance not as a niche offering, but as a significant and underutilised asset for Britain’s economic future. Supporting this agenda is not only the right thing to do. It is firmly in the national interest.”
Naz Shah
MP and Chair, All-Party Parliamentary Group on Islamic and Ethical Finance, and UK Trade Envoy to Indonesia and ASEAN
The UK holds 85% of Europe’s Islamic finance assets and ranks fifth in the world for Islamic FinTech, with 52 firms, the most of any country outside the Islamic world. London is already the West’s Islamic finance capital.
Without wider access to halal pensions, the economy could miss out on £55 billion in pension savings over British Muslims’ lifetimes, with a further £1.9 billion in public-service costs linked to pensioner poverty.
86% of British Muslims want an Islamic banking provider, yet only just over half currently hold an Islamic bank account.
Case Study
Naima is a professional in Surrey with a steady income and a deposit saved over years of hard work. Like a growing number of people who want their finances to reflect their values, she has chosen not to take an interest-based mortgage, but the Islamic alternatives on the market carry a premium that puts a home out of reach.
Now in her 40s, and a divorced mother of two who relies on her local support networks to keep working, she cannot simply move somewhere cheaper. She watches others build equity while her savings sit in low-return accounts and worries most about reaching retirement without a home of her own – once a realistic aspiration for every hard-working person in our country.
Her experience points to a wider trend, in
which ethical finance, something a growing share of the public say they want, too often
sits out of reach of the ordinary saver.