The Islamic Finance Center Of The Western World: United Kingdom
As two non-EU NATO allies, we act together against many common challenges
T.R. London Ambassador Ümit Yalçın evaluated Turkey- United Kingdom (UK) relations, the UK economy after Brexit and COVID-19, and the country's Islamic finance activities for Katılım Finans.
HOW IS THE GENERAL SITUATION OF TURKEY-UNITED KINGDOM DIPLOMATIC RELATIONS? WHAT EFFECT DOES THE BREXIT PROCESS HAVE ON BILATERAL RELATIONS?
We have historical relations with the United Kingdom. Our bilateral cooperation has gained further momentum in every field with the strategic partnership established 2007 and is advancing in a wide range in a multidimensional way. Trade, investments, defence industry, counter-terrorism, education and tourism are the main driving forces of our relations. Our bilateral trade did not decrease in 2020 despite the COVID-19 outbreak and amounted to 16.8 billion dollars. Even during the restrictions due to the pandemic, the momentum of highlevel talks was maintained with various contacts. We also work closely with the United Kingdom to promote prosperity, stability, peace and security in different world geographies. As two non-EU NATO allies, we act together against many common challenges. This common feature of the two countries makes it possible to see the developments in international politics and economy from a broader perspective and diversify their cooperation opportunities. Our cooperation continues with the UK and many other international organizations, especially the G20.
WHAT CHANGES HAS COVID-19 CAUSED IN THE UK ECONOMY?
The United Kingdom has been one of the countries most adversely affected by the Covid-19 outbreak. The UK economy shrank by 9.9% in 2020, with curfews implemented to combat the epidemic. It is noted that this is the largest economic recession in the last 300 years. Public borrowing in 2020 within the framework of economic support packages aimed at mitigating the effects of restrictions on employees and employers amounted to approximately £320 billion. By October 2021, the UK's total public debt reached £2.1 trillion, almost equaling its gross domestic product (GDP). On the other hand, with the relaxation of restrictions resulting from the success in vaccination, a strong recovery was observed in the economy. The economy is expected to grow by 6.5% in 2021 and by 6% in 2022. Inflation, which was recorded as 3.1% in September 2021, is expected to rise to 4% at the end of the year due to the developments related to the epidemic and disruptions in supply chains.
The UK's plans to diversify its supply chains, develop its digital infrastructure, and invest in green energy generation and technology may offer Turkish businesspeople opportunities
COULD YOU TELL US ABOUT THE CURRENT AND POTENTIAL AREAS OF COOPERATION BETWEEN TURKEY AND THE UK?
Our bilateral trade is currently developing intensively in a wide range from automotive to white goods and textiles. With the Free Trade Agreement we signed on December 29, 2020, we aim to carry our foreign trade volume to further levels. The experience of the United Kingdom in terms of investment and loan financing and Turkey's experience in agriculture, manufacturing industry, textile and IT sectors are also suitable for creating cooperation opportunities. The epidemic and disruptions in global supply chains also offer new areas. For example, it is envisaged that the Turkey- United Kingdom Health Forum will be held in Istanbul in December 2021 and cooperation in fields such as healthcare, pharmaceuticals and medical industry will be discussed. The UK's plans to diversify its supply chains, develop its digital infrastructure, and invest in green energy production and technology will also offer Turkish businesspeople opportunities.
WHAT KIND OF ATMOSPHERE DOES THE BREXIT PROCESS OFFER FOR TURKISH BUSINESSPEOPLE?
The Free Trade Agreement we signed ensures continuity in bilateral trade. With the said Agreement, customs duties on industrial products have been eliminated. Existing concessions with the EU in agriculture and processed agricultural products were scaled and reflected in our new commercial relationship. The parties decided to update the said Agreement to make it more comprehensive and assertive by including new sectors. Negotiations in this direction will begin in thecoming period. I believe that the positive and targetorientedeconomic agenda between our countries willalso positively affect Turkish businesspeople operatingin different sectors.
WHAT WOULD YOU SAY ABOUT THE LATEST SITUATION OF ISLAMIC FINANCE ACTIVITIES IN THE UK?
Apart from the Middle East, North Africa, South and Southeast Asia, which are the centres of Islamic finance, the United Kingdom stands out as an essential Islamic finance centre with its sukuk issuances in the Bank of England's work on Islamic finance. After the first sukuk transaction was carried out on the London Stock
The United Kingdom stands out as an essential Islamic finance centre with its sukuk issuances and the Bank of England's work on Islamic finance
Exchange in 2006, a total of more than $50 billion in financing has been provided with 68 issuances carried out on the Stock Exchange. On the other hand, in 2014, the UK Treasury took on debt by issuing sukuk for the first time, thus becoming the first country in the Western world to issue Islamic government bonds. The UK Treasury also issued its second sukuk this year.
Another prominent institution in Islamic Finance is the Bank of England. The Bank announced that it is working on alternative liquidity facilities to enable Islamic banks in the UK to benefit from some of the facilities provided by the Central Bank to other banks in accordance with Islamic rules.
Finally, notable/significant developments have been recorded in the United Kingdom in the fields of Islamic insurance (takaful), wealth management (Islamic funds) and Islamic fintech, which have an important place in financial activities.
The UK Treasury took on debt by issuing sukuk for the first time, making it the first country in the Western world to issue Islamic government bonds
Ambassador of the Republic of Turkey to the United Kingdom of Great Britain and Northern Ireland Ümit Yalçın