Gatehouse Bank, a Shariah-compliant, ethical UK challenger bank, has published a report* outlining four key recommendations for the UK government to unlock further growth by levelling the playing field between Islamic and conventional finance.

The report, which was presented this morning at an event at the House of Lords, highlights the significant global growth projection for Islamic finance – from £140 billion in 2003 to £3.2 trillion by 2030.In the UK, this is complemented by strong consumer demand, with previous research by Gatehouse Bank revealing that just under nine in 10 (88%) UK consumers of the Muslim faith and three in 10 (30%) UK consumers not of the Muslim faith, would consider switching to an Islamic finance provider.

Drawing on lessons from comparable markets in Africa, Australia, Canada, the EU, the UAE and the US, the report makes four key recommendations:

1. Establish a government-led Islamic finance taskforce to identify areas of growth, including facilitating inward investment and attracting international investors seeking alternative sustainable options.

2. Attract new Islamic finance entrants by removing barriers and disadvantages compared to conventional finance, such as increasing the Bank of England’s Alternative Liquidity Facility.

3. Develop a cohesive UK government strategy on Islamic finance, to level the playing field and ensure alternative finance structures are considered when formulating policy and proposing new legislation.

4. Foster global collaboration on Islamic fintech to fuel the already strong UK market and enable it to grow.

The UK’s Islamic finance market is projected 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 institutions, including five fully Shariah-compliant banks, now providing Islamic finance products, which is more than any other Western nation. Additionally, the UK is already home to the largest number of Islamic fintech firms outside the Middle East, giving it a strong foundation to become a global leader in the sector.

Charles Haresnape, CEO of Gatehouse Bank, commented: "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.”