Plans for the introduction of a UK “digital pound” are facing significant challenges as Bank of England officials grow increasingly sceptical about the project. The idea of a central bank digital currency (CBDC), often referred to as “Britcoin,” was initially slated for a formal decision in 2025, with an expected launch by 2030. However, concerns surrounding privacy, costs, and persistent conspiracy theories are raising fresh doubts about whether the digital pound will ever come to fruition.

A digital pound would theoretically offer consumers a secure, electronic form of money, with transactions managed through smartphone apps and underpinned by the safety of central bank backing. However, some critics, including certain politicians and conspiracy theorists, fear that a CBDC could enable the government to monitor and control citizens’ spending. Nigel Farage, leader of the Reform Party, has warned that a digital pound could give the state “total control over our lives.”

These concerns, combined with the practical challenges of creating a national digital currency, have put the project in jeopardy. According to sources familiar with the discussions, Bank of England officials remain divided on whether the benefits of a digital pound outweigh its potential risks. The final decision will ultimately rest with Bank governor Andrew Bailey and Chancellor Rachel Reeves.

The global context is also complicating the UK’s plans. In the United States, lawmakers recently passed an “anti-surveillance” bill in the House of Representatives, aiming to block the launch of a digital dollar unless Congress explicitly authorizes it. Meanwhile, the European Central Bank is expected to make a decision by the end of 2025 on whether to proceed with the development of a digital euro, despite resistance from Germany’s conservative Christian Democrats, who are concerned about user privacy.

This hesitation reflects broader caution over CBDCs, particularly those intended for everyday use by retail customers. While the UK and European authorities initially viewed CBDCs as a necessary response to private stablecoins, such as Facebook’s now-defunct Libra, enthusiasm has waned due to technical and political challenges.

Despite growing skepticism over retail-focused digital currencies, the push for a “wholesale” CBDC, intended for use among commercial banks and financial institutions, remains strong. Policymakers believe that a wholesale CBDC could streamline interbank transactions and reduce systemic risks without raising the same privacy concerns.

A Bank of England spokesperson confirmed that work on the digital pound is still “ongoing,” with no formal decision yet made on whether to proceed. The spokesperson emphasized that, should a digital pound be introduced, it would be accompanied by primary legislation to safeguard user privacy and control over their funds.

Major government contractors are pushing the financial burden of rising national insurance (NI) contributions and higher wages onto the Treasury, raising concerns about the impact on taxpayers. Leading cleaning, facilities management, and construction companies, including Churchill Group, Mitie, and Mace, are negotiating with Whitehall to pass on the costs of April’s employment-related tax increases.

Starting in spring 2024, employers will see an increase in NI contributions from 13.8% to 15%, along with a rise in the national living wage from £11.44 to £12.21 per hour. While private-sector providers with commercial clients may be forced to trim their workforce or implement other cost-saving measures, public sector contractors are seeking to secure higher rates on their government contracts. Many of these companies have contract clauses that allow for price reviews if labour costs rise due to legislative changes, while others are renegotiating deals to protect slim profit margins.

Churchill Group, which provides cleaning services for train companies under the oversight of the Department for Transport, has confirmed it will raise rates to offset the increased wage and NI costs. Mitie, another major contractor, expects to recoup around 60% of its additional NIC costs, estimated at £35 million, through similar pass-through clauses. Mace, a leading construction firm, is set to open discussions with government departments to recover additional costs related to building and infrastructure projects, including hospitals.

Government sources say they have little choice but to agree to these higher contract rates, fearing that cutting back on public services would be detrimental. However, concerns are mounting that the rise in outsourced contract prices will create a wave of cost increases across various sectors, including the retail industry. The Treasury’s analysis suggests that major retailers, such as Tesco and Amazon, will also face significant additional costs due to the NI changes.

Business groups, including the British Retail Consortium, have warned that the extra labour costs could lead to job losses in the private sector. The sheer scale of the increases may force companies to reconsider their staffing needs. However, Paul Nowak, general secretary of the Trades Union Congress, has dismissed these concerns, urging caution in accepting companies’ claims.

The Treasury remains confident that its budget will deliver economic stability, pointing to targeted business rate relief for the hospitality, retail, and leisure sectors, as well as a permanent lower business rate to be introduced in 2026. Despite the government’s assurances, taxpayers may ultimately feel the financial strain as contractors pass on these rising costs.