CEBR tips UK finance bonuses to fall
Financial services sector bonuses will keep falling until 2015
By CFOWorld.co.uk staff | CFO UK | Published 16:59, 12 November 12
Bonuses in the UK financial sector will dip by more than half to £1.6 billion, according to the Centre for Economics and Business Research (CEBR).
In a study published on Monday, CEBR said the financial services sector bonuses will keep falling until 2015, in keeping with the impact of tough market conditions and widespread public discontent about bankers’ bonuses.
However, the CEBR said both factors would combine to put a squeeze on bonuses well beyond the banking sector and extend to brokerage and other financial sector firms. It also expected employment levels in the City to continue shrinking.
If all negative factors were to come into play, the CEBR reckons London would be overtaken by Hong Kong as a rival financial centre by sheer size. Technically, London is already behind New York by finance employment levels, but the CEBR said many of the New York jobs were focused on servicing the domestic US economy, meaning that for now London retains its crown as the top international centre.
CEBR data showed that City financial sector bonuses for 2012 – due for disbursal in January or February next year – will be down 86 percent down on the £11.5 billion worth of payouts in prior to the global financial crisis in 2007-2008.
The CEBR, which had originally forecast bonuses of £2.3 billion for 2012, predicted they would hit a low of £1.2 billion in 2015 before rising gradually. Bonuses in 2011 totalled £4.4 billion, it said.
CEBR Chief Executive Douglas McWilliams said, "The biggest loser from this is the taxman, who typically earns more from City bonuses than the employees. Revenue from the City - including from corporation tax and other levies - would likely be around £40 billion for 2012, down almost by half from the £70 billion received in 2007-08."
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