What is a 1983 £1 coin worth? | tutor2u Economics

For a different take on how inflation erodes the value of money, calculating 'real' values for nominal values, and considering different forms of investment, this short article on the BBC website is useful. It looks at what an investor could have done with a brand new £1 coin, when it was introduced in 1983, and what the real value of each of them would be now. Asset managers M&G have calculated the returns based on a range of alternative investment options, from 'do nothing' to fully managed investment in the stock exchange, up to the end of 2016. 

The calculations in M&G's report

After taking into account the effects of inflation – which averaged 3.5% between 1983 and 2016 – the M&G report calculates that a newly minted £1 coin kept on the shelf since 1983 would be worth only 32p at the end of this period, in 1983 terms. To have retained its purchasing power, by rising in line with inflation, this £1 would have had to grow to £3.10 by the end of 2016. 

Note, though, that for both UK Government bonds, and for investment in the stock exchange, all income and dividends are being reinvested rather than taken as cash. This underlines a point made by M&G's investment director, who concedes that in order to make the greatest return on the investment, it is necessary not only to accept a greater element of risk but also to make a long-term investment with no need of easy, quick access to the cash. The investment listed that seems to buck this trend, at least in terms of risk, is the high return on Government bonds, which might suggest that for a risk-averse investor, they would have been the optimal investment 33 years ago.

Subscribe to email updates from the tutor2u Economics

Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.

You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.

Job board

Economics Contributor

tutor2u, On-line

Teaching Vacancies


Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u

A New Home for tutor2u Resources

We've just flicked the switch on moving all our digital resources to instant digital download - via our new subject stores.

For every subject you can now access each digital resource as soon as it is ordered. This will always be the latest edition of each resource too (and we'll update you automatically if there is an upgraded version to use).

Simply add the required resources to your cart, checkout using the usual options and your resources will be available to access immediately via your mytutor2u account.