The new £1 coin is out today – its first revision since it was introduced in 1983. At 34 years old, the pound coin is a good case study on the power of inflation, which has become more of an issue for consumers in recent months.
Insurance company Aviva has worked out that in terms of pricing power – the value of goods and services that money will buy you – one pound will purchase one-third of what it could in 1983. Today, it has a relative purchasing power of only 32 pence, compared to the purchasing power of one pound in 1983. So, if the Bank of England wanted the new coin to have the same purchasing power as it did in 1983, it would be revalued as the £3.10 coin.
Looked at in another way, parents today should be giving their children at least three times the pocket money they themselves received in 1983. Children now receive on average £6.55 a week.
“Need for vigilance” on inflation
Alistair McQueen, head of saving and retirement at Aviva says: “Inflation silently shrinks the value of our hard-earned cash. This simple example powerfully demonstrates the value of constant budgeting and careful investing to minimise its impact. With inflation on the up, the need for vigilance is greater than it has been for a number of years.”
The Consumer Prices Index (CPI) rate of inflation rose 2.3% in the year to February, the highest level since 2013.
Why is the £1 coin being replaced?
The current coins are being replaced because they are so vulnerable to being faked, with the Royal Mint estimating that around one in 30 of all current £1 coins in circulation are forgeries.
The new 12-sided £1 coin will be the most secure coin in the world. It boasts several new security features, including a hologram, to prevent counterfeits, which cost taxpayers and businesses millions every year.
The new coin has a number of features that make it much more difficult to counterfeit:
- 12-sided – its distinctive shape makes it instantly recognisable, even by touch.
- Bimetallic – it is made of two metals. The outer ring is gold coloured (nickel-brass) and the inner ring is silver coloured (nickel-plated alloy).
- Latent image – it has an image like a hologram that changes from a ‘£’ symbol to the number '1' when the coin is seen from different angles.
- Micro-lettering – it has very small lettering on the lower inside rim on both sides of the coin. One pound on the obverse “heads” side and the year of production on the reverse “tails” side, for example 2016 or 2017.
- Milled edges – it has grooves on alternate sides.
- Hidden high security feature – a high security feature is built into the coin to protect it from counterfeiting in the future.
The new pound also features a new design that shows the English rose, the Welsh leek, the Scottish thistle and the Northern Irish shamrock emerging from one stem within a royal coronet. This was created by David Pearce who won a public design competition at the age of 15.
Return your pound coins before they lose legal status
Around £1.3 billion worth of coins are stored in savings jars across the country, and the current £1 coin accounts for almost a third of these.
Therefore, ministers are reminding the public of the importance of all old £1 coins being returned before 15 October 2017 when they lose their legal tender status. From this date shops will no longer accept these coins, but you will still be able to take them to your bank.
Then in September it’s the turn of the ten pound note to get a makeover. Jane Austen will be the figure represented on the new polymer tenners.
While the Bank of England has confirmed that the new tenner will also contain tallow, it will look at ways to produce the new £20 note without the use of animal products. This note is not due to come into circulation until 2020 and production has yet to begin.