City bonuses soar again

So spring bonuses in the City have shot up once again, this time by 30% to a record £14bn. The announcement of exactly how fat these wallets are has become an annual event these days, as has the uproar with how City fortunes compare to the bankruptcies and home repossessions in the rest of the country. Indeed, the story has become so familiar that it may cause little more than yawns and the checking of unfeasibly large Rolexes among the City breed. But is that all about to change? After the recent turmoil in the markets, the moneymen may soon be in for a rude awakening.

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Last Updated: 31 Aug 2010
It has been estimated that the recent upheaval sparked by the US subprime collapse may end up costing around 5,000 jobs in the City, and may cause a fall in bonuses of up to 15% in 2007. For many firms it will be a case of feeling the pinch and needing to cut costs. For others, the condition of the market will simply provide an adequate excuse to get rid of a load of dead wood. Those who live by the sword die by the sword, after all.

Many observers will of course see this as a case of just desserts. Everyone likes to moan about how unfair it is that the one million or so people employed in the square mile get so handsomely rewarded while people doing proper jobs like nursing and teaching can’t even afford to buy a house. But it’s often forgotten that the City is such a staple element in our country’s economy. Finance brings in just over a third of Britain's national income. In the US it accounts for only a fifth. And the City contributed about one-fifth of all corporate tax revenues last year. As painful as it may be for some to acknowledge, the UK is actually highly dependant on the huge financial engine that is the City of London. Best keep those prayers for a rude awakening to a minimum.

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