As the £2 coin turns 25, here’s what it bought you in 1998
The £2 coin turns 25: it’s HALVED in value since it came into circulation – here’s what it would have bought you in 1998
- A £2 bimetallic coin then placed in a piggy bank is now worth £1.07 in real terms
- A £2 coin can buy you one loaf of bread today, compared to four 25 years ago
- But it would be worth £6 if you invested it in the FTSE All-Share Index
Inflation has significantly eroded the currency’s purchasing power from £2 over the past 25 years to almost half its value of just £1.07 today.
In 1998 Tony Blair was Prime Minister, the film The Truman Show was released, France won the World Cup – and in June the first bimetallic £2 pound coin was put into circulation.
You could have bought two pints of lager or 20 Cadbury Freddo bars for £2 back then.
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On the 25th anniversary of the £2 coin’s circulation in the UK, a new analysis from M&G’s Investment looked at how inflation has eroded its value.
A £2 bimetallic coin then left in a piggy bank would be worth only £1.07 today, or if deposited in a regular savings account it would be worth £2.90.
But it would be worth just over £6 if it had been invested in the FTSE All-Share Index for 25 years.
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| Item | 2023 | 1998 |
|---|---|---|
| Home brewed cups of tea | 65 | 160 |
| Sandwiches | 1 | 4 |
| Pils lager | 0.4 | 2 |
| liters of gasoline | 1.4 | 5 |
| Freddo | 8 | 20 |
| Big Mac | 0.4 | 1 |
| Source: ONS, Tesco and BigMac Index/local McDonalds menu as of June 2, 2023 via M&G | ||
Shopping baskets are lighter today than they were in 1998
With food price inflation rising at its fastest pace since the 1970s, £2 coins for consumers in the supermarket will go a lot less than they did 25 years ago.
The shopping baskets in particular have taken a hit, with £2 buying just one loaf of bread in shops today, compared to four loaves of bread 25 years ago.
Not to mention Freddos. Sweet-toothed consumers could buy 20 Cadbury’s Freddo bars in 1998, but today only eight with their £2 coin.
However, people not only have less left over in their supermarket carts. Depending on where you are geographically today, you’re likely to get less than half a pint of lager with your £2 coin, compared to two pints in 1998.
If you are a car owner, a £2 coin will now get you just 1.4 liters at the pump, whereas 25 years ago the same £2 coin could buy you 5 litres.
Parit Jakhria, head of long-term investment at M&G, said: ‘With the huge rises in the cost of living in the UK in recent years, we are all feeling how dramatic the impact of inflation can be on our shopping baskets.
It’s just as important, however, to see the longer-term impact of how inflation can eat away at your savings. At a time when every pound counts, the 25th anniversary of the £2 bimetallic coin serves as a reminder of the long-term corrosive effects of inflation.
But for those who are able to put their money to work and accept an element of risk, our analysis shows that you can turn even a modest investment into a healthy pot of money over time, and what more importantly, you can maintain and even increase your real purchasing power. ‘
If you’d invested £2 in a multi-asset fund since 1998, it could now be worth £7.60, according to M&G, allowing you to buy a little more for your hard-earned cash.
The Royal Mint does not disclose the cost of minting coins or the exact weights of each metal used. However, M&G’s analysis estimates that the current metal value of each £2 coin is around £0.09.
This represents an increase of more than 450 percent in the value of the physical metal used in the coin since its first circulation.