The disarmament of the terrorist PKK will bring "massive economic gains" to the region, Türkiye’s Treasury and Finance Minister Mehmet Simsek has said as he outlined his country's ambitious Islamic finance strategy and macroeconomic reform agenda during a high-profile visit to London.

Speaking at the UK-Türkiye Islamic Finance Forum in London on Tuesday, Simsek emphasised that Türkiye’s reorientation toward the West, saying: “We are re-anchoring to the West … and we rely on the UK in making sure that we stay close.”

“... We are pulling out of geopolitical recessions of the last decade.”

He emphasised the continued importance of bilateral relations with the UK. “When the UK was in the EU, it was one of our greatest support. But even outside of the EU, we rely on the UK in making sure that we stay close and we work very closely together with the United States, European Union and the UK.”

He also underlined the country's unique geopolitical role as a mediator. “Türkiye is your best partner in terms of mediating conflicts and building peace — whether you talk about Russia-Ukraine, Armenia-Azerbaijan, or stabilising Syria.”

About the disbanding and disarmament of the terrorist group PKK, Simsek said "it's happening" and the development would unlock “massive economic gains” and support “a more inclusive and democratic society.”

“Finally, when you think about a Turkish story, I just want to remind you that there is something real big happening. It may not be capturing headlines here, but after almost 50 years of terrorism against Türkiye ... the PKK has decided to disband itself and disarm and it's happening. This suggests massive economic gains, more inclusive and democratic society, and has prospects for regional integration," he said.

"We can read the table, and of course, you will get new engines of growth in Türkiye, because demographics is extremely favourable in the east and southeastern Türkiye. So this is the story. This is why you should consider it."

Strengthening economic fundamentals

Simsek also used his London engagements to promote Türkiye's macroeconomic reforms, highlighting recent progress on inflation, fiscal discipline, and external rebalancing.

“Our biggest challenge is inflation. Disinflation is underway. We hope that inflation will fall to single digits by 2027… Headline inflation was 72 percent last year. It’s currently 35 percent — still very high, but it’s coming down.”

The minister said that the current account deficit is narrowing, and Türkiye even recorded a surplus when excluding gold and energy imports.

Despite the fiscal burden caused by the 2023 earthquake, Simsek affirmed Türkiye's commitment to financial discipline. “Debt-to-GDP ratio was about 25 percent last year," he said.

UK-Türkiye collaboration in Islamic finance

Simsek also touched on Islamic finance, describing it as “structurally better equipped to address uncertainty and ambiguity,” citing its foundational principles that “avoid interest, excessive uncertainty, and speculative transactions.”

He emphasised the resilience of Islamic finance during times of global instability.

“Islamic finance tends to be, relative to its conventional peers, more resilient ... because it provides you more stability, liquidity as a part of risk sharing. This is really the essence in terms of your profit and loss arrangements,” the finance minister said.

While the global share of Islamic finance remains modest — accounting for roughly 1 percent of global financial assets — Simsek noted its growth trajectory. “The state of Islamic finance in global financial assets has gone up by 11 folds since the year 2000," he said.

In contrast to the global average, Islamic finance plays a more substantial role in Türkiye’s financial ecosystem, accounting for “roughly about 8 percent of banking assets, 12 percent of capital markets and about five and a half percent of the insurance market.”

Deepening UK–Türkiye ties

Simsek also called for expanded UK-Türkiye cooperation, particularly in services and reconstruction.

“Why don’t we do it together? UK architects, Turkish contractors. Türkiye is second only to China in global contracting.”

Highlighting the country’s $115 billion in services exports and a leading gaming ecosystem — “second to London” with over 850 startups — he pointed to synergy opportunities in tourism, medical services, and digital technologies.