(1888PressRelease)
October 10, 2007 - The impact of the credit crunch on the financial services sector means employees in the City of London will receive lower bonuses this year, it has been predicted.
A report conducted by the Centre for Economics and Business Research (CEBR) has estimated that city bonuses will fall to £7.4 billion for this year, down 16 per cent on the record £8.8 billion payout in 2006.
In a further twist, 6,500 jobs are also likely to be cut from private equity, mergers and acquisitions teams and structured funds.
"City firms are now in a mood to cut costs, and the easiest way to do this is by making smaller bonus payouts," the CEBR said.
Hedge funds and investment banking operations are expected to be particularly hard hit, while the securities trading sector is expected to ride the storm largely unscathed.
Despite this, Sarah Bloomfield, an economist at the CEBR, has stressed that there is no reason for city workers to panic given that bonuses will still be comparatively high.
"The outlook for the City suggests that its 350,000 employees will need to get used to smaller payouts over the next two years," she said.
"However, by any measure, it will still be a large bonus cheque."
Further analysis of the effects of the credit crunch could be supplied by Aranca, an end-to-end provider of on-demand, custom investment, business and economic research.
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