The rate of growth in bonuses has halved in the last 12 months, research has shown.
The Economic & Labour Market Review by the Office for National Statistics found the total amount of bonuses awarded between December 2007 and April 2008 had risen by just £1.5bn to nearly £17bn. Bonus payments had increased steadily by £3bn per year in both 2006 and 2007.
Vicky Redwood, economist with research consultancy Capital Economics, said: “The slow growth in City bonuses is no surprise, but until recently the wider economy was holding up quite well.”
Redwood predicted bonuses would continue at a slower rate over the next 12-24 months.
“I think it will be a pretty significant change given the UK is going into recession – the worst recession since the early 90s – and for those who rely quite heavily on bonuses it will be quite a shock,” she said.
Almost two-thirds (60%) of the total amount of bonuses last year came from the financial services sector, the research found.
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