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City bonuses slashed

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New research suggests bonuses for City workers will fall significantly this year. But they are still at the top of the bonus pile.

This year's City bonuses are set to be at their lowest level in more than a decade.

That’s according to new research by the Centre for Economics and Business Research (CEBR), which forecasts the bonus pool for the Christmas and New Year period will drop to just £1.6 billion. That equates to an average of £6,400 per person.

That’s down from more than £4.4 billion in the corresponding period of 2011/12 and represents a huge fall from the peak of £11.6 billion in 2008.

Here’s how bonuses have changed over the last few years, and how the CEBR expects bonuses to shape up in the years to come.

Year bonus paid

Bonus pool


£3.33 billion


£6.40 billion


£6.95 billion


£9.65 billion


£11.38 billion


£11.57 billion


£5.33 billion


£7.34 billion


£6.75 billion


£4.40 billion


£1.59 billion


£1.27 billion


£1.26 billion


£1.27 billion


£1.30 billion

Why bonuses are falling

As you can see the next few years are likely to see far more restrained levels of bonuses for City workers.

The CEBR believes there are two main reasons for the lower levels of bonuses. And no, neither of them is “this mess is all their fault”.

The first is the vastly reduced level of City activity from the summer onwards. In terms of value gilt trading is down by a third, UK mergers and acquisitions activity is down by a third, equity trading is down 20%, even currency trading is down by 5% – the first fall in three years. Without that activity, there’s less cause for bonuses.

The other reason is politics. Bonuses have become a big source of public interest in recent years and City firms don’t want to be on the front pages for the wrong reason, splashing the cash on huge bonus payments to their staff. Instead they are upping the basic salary for top performers.

How City bonuses compare

Earlier this year the Office for National Statistics (ONS) broke down how the average annual bonus per employee looks across different industries.

And while it found a yearly fall for those working in finance and insurance, the size of the bonus was still substantially bigger than those on offer in other professions.

Here’s what the ONS found:


Average bonus in 2010/11

Average bonus in 2011/12

Financial and insurance activities



Mining and quarrying



Information and communication



Wholesale trade



Real estate activities



Manufacturing: chemicals and man-made fibres



Professional , scientific and technical activities



Electricity, gas and water supply



Manufacturing: engineering and allied industries



Manufacturing: basic metals and metal products






Manufacturing: food, beverages and tobacco



Other manufacturing



Retail trade and repair



Administrative and support service activities



Other service activities



Arts, entertainment and recreation



Manufacturing: textiles, leather and clothing



Transport and storage



Agriculture, forestry and fishing



Accommodation and food service activities



Public administration




Under £100

Under £100

Health and social work

Under £100

Under £100

What I found interesting about this report is that an awful lot of industries, beyond finance, will see bonuses increase, or at the very least frozen. Not bad for an economy that’s not exactly thriving.

Are you expecting a bonus this year? How will it compare to years past? Do you agree with the very concept of the annual bonus? Let us know your thoughts in the Comment box below.

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