Bonuses in City bounce back 50%
Bonuses in the City bounce back by 50 per cent, a leading thinktank has found
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By Matt Hallam. |  |
Wednesday, 21, Oct 2009 12:05
By Sarah Garrod
Bonuses in the City have bounced back by 50 per cent, although they are still far lower than before the financial crisis.
The City will pay out £6 billion in bonuses for 2009, an increase of £2 billion compared to the beginning of the year.
However, the thinktank behind today's figures has said this is "still significantly lower than the £10.2 billion paid out for 2007". The Centre for Economics and Business Research (CEBR) said they had upwardly revised their April 2009 forecast for bonus payments in 2010 from £4.1 billion; partly due to better than expected results from financial institutions, and also due to a revision in methodology.
"Bonuses are beginning to bounce back but will not reach the levels of 2007 anytime soon," said Benjamin Williamson, CEBR economist and co-author of the research.
"Profits of major financial sector institutions have jumped sharply; therefore bonuses, which to some extent are a profit sharing scheme have also risen."
Since the financial crisis began the City has lost 14 per cent of its work force. The CEBR said the number of jobs were unlikely to return to previous levels.
Douglas McWilliams, CEO at CEBR, added: "Banks profits have risen very sharply this year, reflecting a lack of competition in the market. It is not surprising that the increase in bonuses has matched these higher levels of profitability.
"Any attempt to deal with bonuses is likely to be either unsuccessful or very damaging unless it addresses the issue of lack of competition which is at the heart of the sharp rise in profitability."
In 2001 bonuses paid out stood at £3.9 billion, but by 2007 they were at £10.2 billion.