Save, make, understand money


Why your £2 coin is worth half its real value after 25 years

Paloma Kubiak
Written By:
Paloma Kubiak

Today marks 25 years since the bimetal £2 coin was circulated in the UK. How has its buying power changed?

The £2 coin was originally scheduled to launch in November 1997, but was circulated on 15 June 1998.

Back then, you could have bought two pints, or four loaves of bread or five litres of petrol.

But fast forward a quarter of a century with the current sky-high inflation and that same £2 coin won’t even stretch to half a pint, while you’ll be able to buy one loaf of bread or 1.4 litres of petrol.

Sweet-toothed shoppers could pick up 20 Cadbury Freddo chocolate bars in 1998, but today, you can pick up just eight. Meanwhile for tea lovers, you could have enjoy 160 brews at home, while now this has fallen sharply to 65.

According to M&G’s Investment Office, inflation has significantly eroded its purchasing power, meaning £2 left in a piggy bank back then would be worth just £1.07 in real terms today.

If you put the coin in a cash savings account, it estimates you would have around £2.90 today. If you had invested it in the FTSE All-Share index, you would have £6 now.

Parit Jakhria, head of long-term investment at M&G, said: “With huge rises in the cost of living across the UK in recent years, we are all feeling how dramatic the impact of inflation can be on our shopping baskets. However, it is equally important to see the longer-term impact of how inflation can eat away at your savings.

“At a time when every pound counts, the 25-year anniversary of the bimetal £2 coin serves as a reminder of the long-term corrosive effects of inflation. Yet for those able to put their cash to work and accept an element of risk, our analysis shows that you could turn even a modest investment into a healthy pot of money over time, and more importantly maintain and even increase your real purchasing power.”

Related: Almost £9bn in old bank notes yet to be exchanged