This week, the United Kingdom is set to find out the fate of its 1p and 2p coins.
The official announcement whether the coins will be pulled from circulation comes only a year after Philip Hammond, the British Chancellor, called the copper coins “obsolete.”
There are already many signs that point towards 1ps and 2ps being scrapped. Last year, Hammond disclosed a Treasury consultation in his spring statement which seemed to be laying the path towards the end of the use of the copper coins.
Following a public uproar, Theresa May, the British Prime Minister, said that there were no plans to pull coppers out of circulation. A report from the Mail on Sunday also insisted that a government source informed it: “We will confirm the penny coin won’t be scrapped.”
The consultation document of the Treasury from March last year emphasised how more and more people are making use of digital payments instead of cash and that “spurred by convenience, the rise of e-commerce, and mobile technology, digital payments have grown by around 85% since 2006, with a corresponding decline in the use of cash.”
Crucially, it stated: “In the normal course of the cash cycle, many denominations fall out of circulation, for example, by being placed into savings jars. Surveys suggest that six in ten 1p and 2p coins are used in a transaction once before they leave the cash cycle. They are either saved or in 8% of cases are thrown away.”
It added: “To meet the demand created by such losses from circulation, in previous years the government and the Royal Mint have needed to produce and issue over 500 million 1p and 2p coins each year to replace those falling out of circulation.”
The Bank of England has also come out in support of ending the use of the 1p and 2p coins. It stated that killing copper coins would not cause inflation.
It added that the “overwhelming weight of literature and experience, suggests it would have no significant impact on prices,” said BoE analysts, before adding that the inflationary argument is “deeply flawed on a number of levels.”