Personal Finance

Penny drops: 1p and 2p coins facing axe

The future of copper coins is in doubt as the Government launches a wide-ranging review of currency.

In a consultation paper released as part of Chancellor Philip Hammonds Spring Statement, ministers question whether the current mix of eight coins and four banknotes denominated in pound sterling meets modern needs.

“A sharp decline in the use of low-value coins and a surge in contactless card and phone payments has prompted the rethink,” The Daily Telegraph reports.

The government report reveals that 60% of 1p and 2p coins are only used once before being saved in piggy banks or thrown away.

An extra 500 million copper coins need to be minted each year to replace those falling out of circulation.

Many other countries, including Australia, Canada and Switzerland, have removed their lowest-denomination coins after inflation ate into their value, The Times reports.

The UK Government is also considering dropping the £50 note, which it says is rarely used in everyday transactions. Backers of the proposal also cite a common perception that the notes are often used for illegal activities.

LBC Radio presenter Nick Ferrari has criticised the plan to axe copper coins, accusing ministers of being “incredibly out of touch” with people. 

“Because for a lot of people, a packet of biscuits that cost £1.99 instead of £2, that penny is actually quite important,” he said during an on-air discussion. “This is a PR disaster waiting to bite the Conservatives in the rear end.”

The review has also attracted attention on social media, with some arguing that it could harm charities and amusement arcades, and lead to price increases.

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