City bonuses set to slump – with taxman hit too

CITY bonuses are expected to collapse this year and next, to levels not seen since 1998 as wholesale banking performance stalls, a think tank has warned.

Total bonus payouts in the City for 2012-13 are expected to fall by 48 per cent to £2.3 billion, down from £4.4bn for 2011-12 and drastically down from its peak of £11.6bn in 2007-8, according to the Centre for Economics and Business Research (CEBR).

Douglas McWilliams, chief executive of CEBR, said that remuneration levels were “coming back into the real world”, although he warned that the biggest loser was set to the tax man, which is reliant on highly taxed bonuses to fund services.