The global market for Islamic financial services rose by 37% to $729 billion at end-2007. In 2008, IFSL's Islamic Finance report notes that the industry has felt the influence of the credit crunch and downturn in the global economy - Sukuk issuance has more than halved and the value of equity funds has fallen.
Islamic banks, however, have been less affected than many conventional banks as they are prohibited from activities that have contributed to the credit crunch, such as investment in toxic assets and dependence on wholesale funds.
London has been consolidating its position as the key western centre for Islamic finance in 2008. Two Islamic banks, Gatehouse Bank and European Finance House, have been granted licences bringing to five the number of fully Sharia compliant banks in the UK.
Principal Insurance became the first Shariah compliant independent company authorised to offer Takaful to UK residents. In capital markets, four new exchange traded funds and two new equity funds were launched.
IFSL's report indicates that the UK's offering includes a total of 22 banks, far more than in any other Western country. Professional services are provided by 18 law firms and the Big Four accounting firms.
A cumulative total of 18 Sukuk issues raising $10 billion have been listed on the London Stock Exchange, second only to Dubai. With 55 institutions offering educational and training products in Islamic finance, the UK has more providers than any other country worldwide.
"The UK has benefitted considerably from supportive government policies intended to put Islamic services on the same footing as conventional services," says Duncan McKenzie, director of Economics, IFSL.
"Evidence of London's growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 8th with assets of $18 billion, in a global ranking of Sharia compliant assets by country."
"Despite its origins overseas, Islamic finance has found a natural home in the UK," says Sir Andrew Cahn, chief executive officer, UK Trade & Investment.
"Though no sector is immune to the global financial crisis, Islamic finance has shown great resilience. It is important we continue to work with our Islamic finance partners to maintain our position as the leading western centre for Islamic finance service providers."