Mark Carney, the Governor of the Bank of England, has told a group of children that he expects the penny to be scrapped shortly.
He was being filmed for a BBC TV show, and was asked about the future of the penny by one of the children. He responded that he thought its days were numbered, because it wasn’t worth very much.
On one level, it’s not a major issue. If the penny was scrapped, anything priced at 1p would see the price increase, but very few things actually cost 1p nowadays – even penny sweets now cost around 5p.
A study back in 2012 found that 50% of people would be perfectly happy to do away with coppers altogether, and round up or down to the nearest 5p. The same study found that one in ten people admitted they regularly threw coppers away, because they were essentially meaningless.
Dropping the penny could actually be a good thing, because it would reduce the number of coins in circulation – which would be less of a drain on the Treasury, and would cut costs without causing any real harm.
And while we might be initially concerned, we somehow got through a similar situation when the half penny was axed in 1984.
The bad news
Unfortunately, some people will face issues. Clearly it’s bad news for the 99p stores – as being 1p cheaper was their unique selling point over and above the pound shops. Without a 1p, they would have to decide whether or not to squeeze margins even further and price everything at 98p, or charge £1.
Life will initially be more complex for shops in general, because they will have to reprice anything ending with a 1, 3, 7 or 9. With margins currently so tight, a price cut seems unlikely, so we can expect some rounding up across the board.
On the plus side, forcing anyone pricing at the 99p price point to round up may have its advantages. It may be less misleading for any customers seduced into thinking something on sale for £5.99 is just ‘£5 plus a bit’, as opposed to ‘almost £6’.
If you have concerns about the axing of the penny, the good news is that this isn’t up to Carney at all – it’s a question for the Royal Mint, and nobody there has suggested the penny is set for the chop.
Even Carney didn’t say outright that pennies ought to go, he simply pointed out that as a result of inflation, a penny will become worth less and less, so eventually there will come a time when it’s worth so little that it’s not worth making the coins.
But what do you think? Would you like to see the world rid of fiddly pennies, or are you too attached to them? Let us know in the comments.