This release relates to the “Budget 2008 (HC388)” document released by HM Treasury, and outlined to the UK Parliament, by Chancellor of the Exchequer Alistair Darling MP, on 12th March 2008.
Junaid Bhatti, Director of Islamic Finance consultancy “Ballencrieff House”, is one of the architects of the UK’s Islamic finance revolution, and was part of the team that set up the first Islamic bank in the Western world. He explained the significance of the Chancellor’s plans: “Promoting ethical financial conduct is at the core of Islamic principles. The Chancellor is working to create a level playing field for British Muslims who want to run their financial affairs in accordance with their religious ethics.”
“Right now the capitalist economies are suffering severe liquidity shortages due to the global credit crunch. These economic problems are a result of irresponsible lending and the gambling of customers’ money by non-ethical financial institutions. Islamic finance is the perfect antidote to this, because it forces banks to act more responsibly and with greater prudence. It does this by balance risks between banks and their customers, and through an insistence that all transactions must be supported by tangible assets.”
“The Chancellor’s budget lays the foundations for the UK government to issue a sovereign Sukuk (Islamic bond) within the next year. Several measures have been announced to assist with this historic project. The main changes will be the introduction of changes to the stamp duty and taxation regulations, which will ensure that Sukuk will be given the same tax treatment as conventional bonds.”
The Chancellor’s intended changes are expected to provide a boost for the UK’s Islamic finance industry. Bhatti continues: “Official support for Islamic finance, through the issuance of Sukuk by a Western government, will send a powerful signal to Muslims in the UK and abroad. Muslim in the UK will be given confidence in the stability and long-term prospects of the fledgling industry, and will be encouraged to start switching their finances to the Halaal alternative. The move will also encourage more Muslims from the oil-rich Middle East to invest more of their funds in one of the UK’s four (recently-authorised) Islamic banks.”
About Ballencrieff House
Ballencrieff House is a consultancy firm that helps client firms reach out to minority communities in the UK and Europe. The company was founded by Islamic finance expert Junaid Abbas Bhatti.