41/06

13 June 2006

Speech by the Chancellor of the Exchequer, the Rt Hon Gordon Brown MP, at the Islamic Finance and Trade Conference, London.

Check Against Delivery

Introduction

Assalamu alaykum

Let me start by saying what a pleasure it is to be here this morning at this important and groundbreaking conference, a conference that not only brings together so many distinguished leaders in commerce, business and community life, but sets the important long term ambition - and an ambition that I share with you - to make Britain the gateway to Islamic finance and trade.

This speech and this conference gives me the opportunity to recognise and celebrate the invaluable contribution of the whole of the Muslim community in Britain.

In my time as Chancellor I have visited all parts of the United Kingdom. I have come to see just how much British Muslims make a huge contribution to this country's success - to our prosperity, our society and our culture. Islam is Britain's second largest faith, and Muslims are involved in every walk of British life - from politics, academia, law, the arts and social services to humanitarian aid work, business and finance.

I want in particular to thank the Muslim community for the enormous contribution you make to our economy. We have all learnt much from your entrepreneurial flair and talent. It is a fact that business creation is higher in the Muslim community than in many other sections of our society, and I know that British Muslims are playing a vital role in the next stage of Britain's economic development.

But, of course, the relationship between Islam, Muslims and Britain is not a new one.

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Islamic trade

And it is this entrepreneurial vibrancy and dynamism of Britain's Muslims, combined with Britain's openness to the world and the historic ties I have detailed with Muslim countries, that makes the ambition you have set for yourselves with this conference – to make Britain the gateway to Islamic finance and trade – a realistic and realisable ambition, one I believe Britain is well placed to realise.

Already, Britain is the largest European trader with many Islamic countries - the largest European investor in Oman, the largest non-Arab investor in Egypt, and second largest global investor in Pakistan and Saudi Arabia;

and as I found on my own visit to Saudi Arabia last year, our trade with Arab countries has grown 60 per cent in the last five years;
while at the same time our exports to Indonesia, Malaysia, Pakistan and Bangladesh grew to nearly £3 billion in 2005 and to North Africa to over £1 billion.

But I, like you, want to see Britain's strong economic ties with Muslim countries strengthen still further.

Trade and commerce are the foundation for economic growth and long term prosperity - for Britain and all countries. It is increasing world trade - growing over the past two decades at twice the rate of output - that is driving the transformation of the global economy.

But it is also through trade and economic cooperation that we bring peoples and countries closer together. Of course we are all resolutely committed as one to rooting out violent extremism wherever it is from and terrorism from whatever source. But if too often our relationship with the Muslim world is described through a prism of conflict and tension, too often also are underplayed the much broader and deeper relationships that have existed between Britain and the Muslim world through migration, shared knowledge - such as Islam's contribution to scientific development, and of course good trade relations. Yet I am aware that it was mainly through peaceful trade that the faith of Islam arrived in different countries

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Islamic Finance

So what - together - do we need to do to realise our shared ambition of enhanced trade that today’s conference has set?

First, we must together strengthen Britain's own trading links with Muslim countries. In the Budget this year, I announced proposals for a revamped UK Trade and Investment and new targets for expanding trade with emerging economies. And with 35 UKTI offices in Muslim countries across the world, boosting Islamic trade will be an important element of this.

Second, the foundation for making Britain the gateway to Islamic trade, is to make Britain the global centre for Islamic finance.

Our unique qualities - our language and geography, our stability and openness to the world, our inventiveness and flexibility - have given the City of London its historic advantage, the first mover advantage, of already being, along with New York, the leading global financial centre for established markets.

Now by showing the same qualities, London can be the location of choice for emerging markets - from India and China, to Eastern Europe, and the Middle East and Muslim countries all over the world.

Today British banks are pioneering Islamic banking - London now has more banks supplying services under Islamic principles than any other Western financial centre.

British professional services firms are leading the way in Islamic business services - with English commercial law now the law of choice.

And I want to thank all of you for your innovation and enterprise.

And I want to thank also the Muslim Council of Britain and the many of you here who have worked with the Government through our tax and regulatory reform to support the development of Shari’a compliant finance:

first, three years ago, for mortgages, enabling the expansion of the Islamic mortgage market to over half a billion pounds - growing by almost 50 per cent in the last year alone;
then last year, for savings and borrowing and providing proper consumer protection for Ijara products;
this year, for business finance, with last week Parliament approving measures in the Finance Bill for diminishing musharaka and wakala;
and now, working with us, to look at international finance, Islamic securitisation and sukuk - and I am pleased that London was the financial centre chosen recently to advise on one of the largest sukuk deals ever done.

And I look forward to the conclusions of this conference, and hearing your ideas, as we continue to work together on this agenda.

All these changes are vital to increasing trade with Muslim countries and making London the location of choice for Islamic investment, but they are also vital to ensuring the Muslim community in Britain can trade, build successful businesses and create jobs.

And our New Deal is designed to help young men and women, who do not have jobs and sometimes not even the skills for jobs, to acquire the training, the confidence and the opportunity to find fulfilling work that will address the challenge of inner cities communities where unemployment has remained too high. And to this effect I can inform you we are established a Commission of business leaders to advise on helping the private sector to employ more people from ethnic minority groups.

And so I also welcome the development of Shari’a compliant business finance products - such as Business Finance North West's Ethical Fund - enabling Muslim entrepreneurs to generate the capital they need for a business start-up or expansion.

Third, I welcome the substantial progress we have made over the past twelve months towards an EU and Gulf Cooperation Council Free Trade Agreement - and we will do what we can to secure the completion of the negotiations.

And I have been privileged to be part of the Broader Middle East and North Africa Initiative. I have met in recent weeks Finance Ministers from Egypt, Lebanon, Saudi Arabia, India, and more than 20 African countries as well as the Prime Minister of Pakistan and discussed how we take this important initiative forward – working together to stimulate investment, growth and jobs.

And because the opportunities for trade are large, it is in all our interests we should do all we can to break the world trade deadlock. I have just returned this weekend from the G8 Finance Ministers meeting in St Petersburg where we discussed the urgent progress we need to make.

All of us are facing up to the challenges of globalisation, to the rise of Asia – one million manufacturing jobs lost from America, Europe and Japan, one quarter of a million jobs offshored, oil prices rising not least because Asia now takes up 30 per cent of demand.

So this is a period of fast moving change for all economies. And as the Governor of the Bank of England said last night, a time of inflationary pressure.

Let me say that even as we cope with a doubling of oil prices and the rises in utility prices we will maintain our vigilance against inflation.

British inflation remains lower than 2.5 per cent inflation in the Euro Area and 3.5 per cent in the USA.

We will be resolute in our anti inflation discipline. I have already made it clear that just as public sector settlements are this year averaging 2.25 per cent, in the next year and future years public sector pay settlements should be founded on our inflation target of 2 per cent.

To secure a world trade deal, heads of government should stand ready to use all the resources of leadership and statesmanship. The prize is a 50 per cent increase in world trade - and specifically the World Bank estimates a deal could bring $14 billion increased prosperity to the Middle East and North Africa and a further $2 billion to Indonesia alone.

And the key that will unlock that door is America and Europe offering progress by reducing protectionism in agriculture, and India's and Brazil's willingness to move with liberalisation of industrial goods and services.

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Education

And all these steps are not about us - the Government - or you - the Muslim community - doing the expedient thing. It is about us together doing the right thing: recognising that we live in a world that is increasingly interdependent - what Martin Luther King called our inescapable network of mutuality - and recognising also not just the interests we share in common, but the values we share in common.

I know I do not need to tell you about the intertwining of destinies and lives. The hadith (saying of the Prophet Muhammad) said that "The ummah, the Muslim global community, is like the human body, when one part feels pain, the other parts must reflect that pain" --- a truth of relevance in and beyond the Muslim world that emphasises our duty to strangers, our concern for the outsider, the hand of friendship across continents. That says I am my brother's keeper, I will be your comfort.

So more than ever we are in an era of global interdependence, one in which we depend and rely upon the other - a world society of shared needs, common interests, mutual responsibilities, and linked destinies, a world where increasingly we share across continents a responsibility to those who need our help.

I am impressed by the commitment the Muslim community has made to education, I believe there is a shared campaign we must now mount that has economic as well as educational advantages for us all. This is embodied by the Education for All Initiative launched by Nelson Mandela in Mozambique and then the theme of the conference I addressed of 22 African countries in Abuja in Nigeria a few days ago: that the world's promise of free education for every child by 2015 is kept, school by school, class by class and child by child.

Education is essential to the ambition of this conference today. Investment in people is the foundation for a country's capacity to trade, not just the very best anti-poverty strategy, but also the very best economic development programme.

I am aware of the importance Islam places on education, through the hadith such as: "Seek knowledge from the cradle to the grave" and "Verily the men of knowledge are the inheritors of the prophets."

I was shocked to learn that while Muslims constitute 22 per cent of the world's population, almost 40 per cent of the world's out-of-school children are Muslims. In Pakistan alone there are nearly 8 million children not in school, in Bangladesh nearly 4 million, and over one million in Mali, a total of more than 40 million Muslim children who do not go to school.

So I know you will agree with me that it is one of the world's greatest scandals that in total 110 million children do not go to school.

Yet for $10 billion a year we can meet our promise and provide education to all these children.

So when I visited Nigeria and met with Ministers from across Africa just a few weeks ago I was privileged to see so many countries - some committing for the first time, some reaffirming the commitment they have already made - to 10 year plans that show step by step their route to meeting the Millennium Development Goal to provide free education to every child. These plans will give education to 30 million children, 12 million Muslim children, in 20 countries.

And led by Hilary Benn, our Secretary of State for International Development, we will enter into 10 year agreements with countries to finance their 10 year plans, in total committing at least $15 billion over the next ten years - four times as much as the $3.5 billion of the previous ten years. In Singapore in September, I will press other G8 Finance Ministers to commit to their share.

Conclusion

My father used to tell me that we can all leave our mark for good or ill.

He quoted Martin Luther King saying everyone from the poorest to the richest can be great – everyone can be great – because everyone can serve.

In the words of the Prophet Muhammad: "He is not from amongst us, he who does not show mercy and kindness towards children and elders."

We are at our best when we work together to serve others, this is the way forward for us as a country and an international community: to raise international understanding; to reach beyond ourselves and beyond our borders; to embrace each other and in doing so make the world a better place.

At the very heart of this is the theme you have chosen today - bringing countries and peoples closer together through trade and economic cooperation.

That is why I think today's conference is a landmark event - and why I am pleased to join you in advancing from today onwards the ambition for Britain to be the global gateway to Islamic finance and trade.

Let me thank all of you here for what you are doing to make this vision a reality.

Thank you.

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