Don’t pinch the penny!

It always takes a few hours for the nasties in a Budget to become clear. That is as true with today’s seemingly content-less Spring Statement. In the small print is a proposal to do away with one pence and two pence coins. Of course, inflation eats away at the value of coins so as to make the smaller ones pretty value-less over time – an argument made by the Treasury. The country survived the abolition of the farthing in 1971 and the halfpenny in 1984. A halfpenny in the mid-1980s, indeed, was worth more in real terms than a penny now. Yet the Spring Statement documents also propose to do away with the £50 note, even though inflation has worked the opposite effect on that piece of currency – a £50 note now is worth in real terms what a £20 note was worth in the 1980s. As for abolishing the £50 note, the Treasury advances a different argument: that £50 notes are more often used a ‘store of value’ than for transactions.

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It is pretty hard to see this as anything other than a stealthy move to do what some policymakers who lurk in the bowels of government have wanted to do for some time: to try to phase out the use of cash for good.