Investments aimed at Muslims could be in next mont's Budget

The government is expected to reveal whether it will push ahead with plans for Sharia-compliant bonds to attract money from the Middle East in next month’s Budget.

Some financial services, including insurance, break Sharia law which prohibits gambling and making money from interest.

Currently, Sharia-compliant insurance, known as takaful insurance, is extremely rare in the UK with only HSBC offering a household product.

British Islamic Insurance Holdings is awaiting FSA regulation and would be the first company in the UK to offer a broad spectrum of takaful products.

The proposals are one part of a plan initially put forward by former economic secretary Ed Balls, who outlined the need to make more financial products available to British Muslims, including Sharia-compliant insurance known as takaful.

At the time, Balls said the UK should establish itself as the financial partner of choice for emerging markets and a leading global centre for Islamic finance.

A three-month consultation period into the scheme ends today.

The government will then decide whether the UK will become the first Western nation to issue bonds approved by Muslim clerics. Its decision is expected next month.