Britain’s least valuable coin is in terminal decline (The Economist – January 21, 2024)

Inflation is the prime culprit for the problems of the penny

For many centuries using Britain’s currency required advanced mathematical skills. The pound was divided into 20 shillings; a shilling was worth 12 pennies; and each penny was further subdivided into two halfpennies or four farthings. Many argued for a more straightforward system. As early as 1696 Christopher Wren was arguing that a decimal system would be “very proper for accounts”.

Wren eventually got his wish. In 1961 the government dropped the farthing, the spending power of which had fallen by so much that bus conductors were refusing to accept it. A decade later, in 1971, decimalisation divided the pound into 100 new pennies, and shillings and halfpennies both stopped being minted.

Another five decades on, some of the decisions made then are looking rather dated. The price level has risen by more than 12 times since decimalisation was carried out.

The humble penny is much humbler as a result. When the new penny was first introduced, its spending power was close to that of a modern ten-pence piece; now it is closer in value to the old farthing at the time of that coin’s withdrawal.

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