British Penny Future Less in Question
At one time the United Kingdom had half and third farthings, farthings, halfpennies, and pennies. As inflationary pressures mounted the lowest of these denominations became non-functional and eventually were discontinued….
At one time the United Kingdom had half and third farthings, farthings, halfpennies, and pennies. As inflationary pressures mounted the lowest of these denominations became non-functional and eventually were discontinued.
The third farthing was initially issued for circulation on Malta. The denomination ceased to be issued in 1913. The half farthing was issued for use in Ceylon (modern Sri Lanka) in 1828, later becoming legal tender in Great Britain as well. The farthing met its demise in 1960, while the halfpenny survived until 1984, the year in which the denomination was demonetized.
The penny has continued, even though the penny has been reduced in diameter from 30.86 millimeters to 20.3mm as of 1967 (a 30.86mm proof was issued in 1970).
For comparison, the current U.S. cent has a diameter of 19.05mm. The U.S. cent has also gone through a number of changes in both diameter and metal composition since its introduction in 1793. The English penny began as a silver coin of similar fabric to that of the denier used on most of continental Europe throughout the Middle Ages.
Today, not only the British penny, but also the British two penny coins are endangered ‘specie.’ Not only are neither of them specie in the sense of being composed of any precious metals, but British Chancellor of the Exchequer Philip Hammond has questioned if the two denominations should continue to be minted or not.
In a Treasury consultation during early 2018 it appeared Hammond was leaning towards dropping the two coins. An official spokesman for the prime minister quickly reversed this suggestion, declaring there were no plans to discontinue the penny or two penny.
In late April The Mail on Sunday newspaper quoted a government source as saying “We will confirm the penny coin won’t be scrapped.”
Hammond made his new position official on May 3 when he said, “Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services. But, it’s also clear that many people still rely on cash and I want the public to have [a] choice over how they spend their money.”
Federation of Small Businesses National Chairman, Mike Cherry, appeared to agree, being quoted by Reuters the same day as saying, "A firm wanting to charge 99 pence should still have the freedom to hand a penny change to a customer paying with a £1 coin.”
The British penny has become an economic and political football, using many of the same pro and con arguments used to determine the future (if any) for the U.S. cent. A recent British Treasury consultation document indicates 6 in 10 people surveyed use each of the two coin denominations once, either discarding them or putting them aside afterwards. One in 12 of the coins, according to the survey, were “thrown into a bin.”
According to an April 28 British Broadcasting Corporation broadcast, “The value of the one penny coin has also been reduced by inflation so, in effect, the one penny coin is now worth less than the halfpenny when it was abolished in 1984.”
Australia, Brazil, and Sweden are among the countries that have in recent times dropped their lowest denomination coins. In each situation the discussion has centered on if merchants can round prices up exclusively, or if some prices would be required to be rounded down.
According to the BBC broadcast, “Among many of those who support the continuing use of copper coins, the belief is that retailers would simply round up prices to the nearest five pence if copper coins were scrapped.” (The chancellor’s office had not addressed this issue at the time this article was being written.)
“Bank Underground” is a blog written for the Bank of England, England’s central bank. In 2018 staff members Marilena Angeli and Jack Meaning wrote even if prices were to be adjusted upward only it would have almost no impact on the cost of living as is measured by inflation.
Angeli and Meaning also noted the use of contactless cards and other forms of non-cash payments would still need to price goods and services to the penny rather than rounding the prices. They also quoted statistics indicating only 12 percent of prices end with 99 pence, with a number of items ending with this value declining.
On May 1 the headline on The Telegraph newspaper read “Is saving 1-penny and 2-penny coins monetary madness or a way to preserve Britain’s numismatic history?”
