Why the one cent / one pence should NOT be abolished
aka, please help me.
I've got a debate tomorrow (not a too serious one, but we're against this crazily clever guy who'll beat us up in the questions section) about
'Should the penny be abolished?'
And we're arguing that it SHOULDN'T
So far, I've come up with points such as-Faith the the country- the penny is a traditional sign of England, and taking that away, even if it seems like nothing once done, is a small but sure step towards the Euro, and a step away from our identity as the British
(p.s. this really isn't what I think. I just need to appeal the the extreme patriots here)
And also a giant bit on economic factors:
I believe that the abolishment of the penny could have serious reprucussions for the economy. The economy as a whole is measured by four key indicators: economic growth, inflation, unemployment and the balance of payments.
If the penny is to be abolished, prices will be rounded up. For example, something costing £2.99 will be rounded up to £3. This may not seem like a lot, but this will affect every single good with 99p on the end of the price. In short, this will affect a lot of goods. Therefore, if the penny is abolished, this will lead to quite a considerable increase in the overall price level, which is known as inflation. Some people say that a little inflation is good for an economy, and indeed, the bank of England set themselves a target of 2.0% inflation, and within 0.1% of this target is generally considered to be acceptable. However! The current level of inflation in the UK economy is 2.2%. Clearly, this is already above target, and above what is acceptable. Furthermore, The Bank of England have just reduced interest rates, which means that since people will be getting less back on their savings, and because loans will have less interest on them, they will be spending more. This in itself will lead to inflation. To abolish the penny would be nothing short of an insult to injury, which could be damaging to the economy, and you and I will feel the consequences. Your money will have less value, since something that you may have been able to buy with £10, you no longer will be able to. Our living standards will be lowered, since we will not be able to afford many of the things we once could. Perhaps the richer among us will still be able to afford what was previously possible, but what about the poor? Surely, it is not fair that the rich are unaffected while the poor are made poorer.
The country is already in murky waters in terms of economic growth. As you may or may not know, there has been a 'credit crunch' in America which has caused somewhat of a crisis and has spread over to Britain. In fact, as things now are, the rate of economic growth is expected to slow from 3.2% to 1.7%. This is a considerable slow down. If the penny is abolished, as I have already said, prices will be rounded up. This means that instead of seeing £9.99, consumers will see £10. Lets face it, these prices are more or less the same, but subconciously, the product priced £9.99, just seems cheaper to us, and therefore we are more likely to buy it. Some people like to think that they are unphased by such pricing strategies, but it does work, otherwise businesses simply wouldn't do it! It is no less of an inconvenience to them than it is to you. Anyway, because of this increase in price, people will on average buy less. This means that the total demand for goods and services will go down. If this happens, the national income could stop growing as much, or even decrease. This means that the country could go into a recession, especially with the economy being as vunerable as it currently is. You may be wondering what a recession would actually entail for you and I. The answer is that it would significantly affect our lives. Firstly, there would be widespread unemployment. How would you feel about it if your parents were made redundant? Your standard of living would decrease. If you still even have a job, it is likely that you would be paid a lot less. You may think that I am exaggerating when I say that the country could go into a recession. And yes, indeed, it is quite unlikely, but by no means impossible. The current economic conditions are uncertain ones, and to abolish the penny would be not only unneccessary, but extremely dangerous. And in addition to the uncertain future regarding economic growth, inflation, and unemployment, the UK has a current account deficit of over £80bn, which means that we are, as it were, living beyond our means and importing substancially more than we export. So this means that all 4 indicators of economic performance are at risk. Furthermore, the UK boasts 15 years of stable and healthy positive economic growth, which is unprecedented, so it really is quite a matter of national pride. Is it really worth putting the economy, your standard of living, and national pride in jeaporady to get rid of a mere inconvenience?
(But it's kind of exagerrated, so I'll shove at the end that even if it might not be massively devastating to the economy, it's still a irresponsible and unnessecary move)
GOD PLEASE HELP ME *DIES*