BANKERS and the taxman are facing a disappointing Christmas as a collapse in City activities cut bonuses to a fraction of the level paid out before the financial crisis.
The Centre for Economics and Business Research (CEBR) has revised its forecast for City bonuses downward, saying London financiers are now likely to share £1.6 billion over Christmas and early 2013, down from the £2.3bn forecast six months ago and far below the £11.6bn paid out in 2007-8.
The think-tank predicts bonuses will sink the following year, and stay at around £1.3bn until at least 2017.
While few will feel sorry for City workers, who will pocket £6,400 in bonuses on average, the decline has consequences for the public purse.
CEBR chief executive Douglas McWilliams said: “Taking into account the loss of income from a much smaller City, from lower corporation tax, stamp duty and other taxes, I estimate that government revenues from the City in the current financial year are likely to be about £40bn compared with the £70bn received in 2007-8 at the peak of the cycle.”
A collapse in City activity during the summer and a propensity for firms wary of public outrage at bonus payments are to blame, the group says.
It also released figures showing that New York had replaced London as the world’s top financial centre by number of employees.