Brown to create level playing field for Muslims

-12/03/06

The UK Chancellor has given Muslim leaders private assurances that he wants to create a ìlevel playing fieldî in the economy, so that more and more ìsharia compliantî financial products can be offered to British Muslims.

To comply with sharia law, financial products must not charge or earn interest, which is regarded as usury.

Gordon Brown first made financial moves to help Muslims in his 2003 Budget.

To avoid the payment of interest on mortgages, Muslims had developed an alternative system whereby a bank bought property on the customer’s behalf. It then sold it to the customer charging an additional lump sum on top of the asking price.

However this meant that people had no choice but to pay stamp duty twice in order to stay true to their religious principles.

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This double whammy was abolished by the Chancellor three years ago.

Now Brown hopes further changes will remove remaining barriers to many British and foreign Muslims participating fully in the financial system.

They would help make London the natural home for Islamic funds from around the world, and increase the inflow of investment from oil-rich Middle Eastern countries.

ìMaking the UK and London a centre for Islamic finance means putting in place the tax and legislative framework that is supportive of Islamic products,î said a senior Treasury official.

ìOn top of this, weíre also looking at promoting the City abroad as a centre for Islamic finance.î

Officials insist the changes will not compromise the governmentís determination to root out and cut off sources of terrorist finance.

The Muslim Council of Britain will host a large conference in June to showcase Britain to Muslim investors as a ìgateway for trade with the Islamic worldî. The chancellor will be a keynote speaker at the conference, which is expected to have a delegation from every leading Muslim country.

The sharia finance industry is one of the fastest-growing markets in the world, and is estimated to be worth between £200 billion and £300 billion globally.

Industry projections suggest it will grow by 15% a year over the next decade, and will account for 50-60% of the savings of the worldís 1.2 billion Muslims within that time. The Treasury believes London, with its financial and legal expertise, is strongly placed to benefit from this.

Sharia-compliant alternatives to conventional financial arrangements include ijara products, in which rent rather than interest is paid on a mortgaged house, and musharaka, in which a share of ownership is transferred rather than interest paid.

Islam is not the only religion which frowns upon the charging of interest.

At many times in history Christians have held that the charging of interest is wrong, based on understandings of both the Hebrew scriptures and the New Testament.


Brown to create level playing field for Muslims

-12/03/06

The UK Chancellor has given Muslim leaders private assurances that he wants to create a ìlevel playing fieldî in the economy, so that more and more ìsharia compliantî financial products can be offered to British Muslims.

To comply with sharia law, financial products must not charge or earn interest, which is regarded as usury.

Gordon Brown first made financial moves to help Muslims in his 2003 Budget.

To avoid the payment of interest on mortgages, Muslims had developed an alternative system whereby a bank bought property on the customer’s behalf. It then sold it to the customer charging an additional lump sum on top of the asking price.

However this meant that people had no choice but to pay stamp duty twice in order to stay true to their religious principles.

Related Articles

This double whammy was abolished by the Chancellor three years ago.

Now Brown hopes further changes will remove remaining barriers to many British and foreign Muslims participating fully in the financial system.

They would help make London the natural home for Islamic funds from around the world, and increase the inflow of investment from oil-rich Middle Eastern countries.

ìMaking the UK and London a centre for Islamic finance means putting in place the tax and legislative framework that is supportive of Islamic products,î said a senior Treasury official.

ìOn top of this, weíre also looking at promoting the City abroad as a centre for Islamic finance.î

Officials insist the changes will not compromise the governmentís determination to root out and cut off sources of terrorist finance.

The Muslim Council of Britain will host a large conference in June to showcase Britain to Muslim investors as a ìgateway for trade with the Islamic worldî. The chancellor will be a keynote speaker at the conference, which is expected to have a delegation from every leading Muslim country.

The sharia finance industry is one of the fastest-growing markets in the world, and is estimated to be worth between £200 billion and £300 billion globally.

Industry projections suggest it will grow by 15% a year over the next decade, and will account for 50-60% of the savings of the worldís 1.2 billion Muslims within that time. The Treasury believes London, with its financial and legal expertise, is strongly placed to benefit from this.

Sharia-compliant alternatives to conventional financial arrangements include ijara products, in which rent rather than interest is paid on a mortgaged house, and musharaka, in which a share of ownership is transferred rather than interest paid.

Islam is not the only religion which frowns upon the charging of interest.

At many times in history Christians have held that the charging of interest is wrong, based on understandings of both the Hebrew scriptures and the New Testament.