Cash is ‘Hugely Important’ to the UK Economy
Jun 12, 2024
Cash is ‘hugely important to the UK economy’, serving as a reliable, proven way to exchange value that supports inclusion, privacy and choice, as explored in a recent Financial Times article.
Writing for FT Adviser, finance journalist Stephanie Hawthorne opens with the observation that in the past five years, almost 15,000 cash machines have been removed and over two thousand bank branches have closed. Not only is this limiting the accessibility of cash, she argues, it’s also damaging the high streets. When people came to a high street to bank, they visited businesses in the area, and ‘a prosperous high street means a prosperous back street.’ Without bank branches, people have less reason to visit the high street and related businesses, and this effect trickles down through local economies.
The immediacy of cash and its lack of associated charges (such as ‘swipe fees’ for using credit and debit cards) also benefits small businesses and informal economies in which people on very low incomes depend on work done for cash in hand.
Without cash, people on the margins of society will suffer. Charity collections are already down, student buskers may be no more, and privacy—not always for nefarious reasons—will be lost.
Another aspect of inclusivity is that physical money is designed to be easily understood, counted and used by everyone from the very young to the very old. A recent Welsh Parliament committee meeting was dedicated to the topic of cashless businesses and how they discriminate against people with disabilities, with the government being urged to take action to ensure cash remains accessible and usable to support financial freedom for all.
Some people with physical and cognitive disabilities also find other payment methods difficult to use (they may struggle with pin numbers or passwords, for example).
Hawthorne also touches on the importance of cash for budgeting—as covered in another FT Adviser article—and resilience, pointing out that just a few days prior to writing, she ‘could not buy a sandwich at London Bridge Pret because the tills were down.’ When McDonald’s across Asia-Pacific and beyond suffered similar failures, some were able to stay open thanks to going cash-only.
Cash plays a key role in society, both as a medium of exchange to connect buyers and sellers, and as a store of value. Do we want to kill off a proven tool of commerce?
The simple answer, of course, is no. Hawthorne’s recommendation is to ‘keep physical money, with its concomitant ecosystems of brick-and-mortar banks,’ saying that ‘banks and cash must remain… the twin pillars of a thriving high street.’