The Centre for Economics and Business Research (CEBR) said bonuses will fall by half year-on-year, amid a slack labour market and a decline in City jobs since the recession.
New figures from the body show total bonus pots for City of London workers are expected to fall 48pc in the year ahead, down from £4.4bn in 2011-12 and five times below their pre-recession peak of £11.6bn in 2007-8. The last time bonus pots were around the £2.5bn mark was in 1998.
Douglas McWilliams, CEBR chief executive, said: "City remuneration levels are coming back into the real world. Employees are being told, 'Your job is your bonus so don't expect a large sum in addition'.
"More active shareholders are pressing management to remunerate in line with the economic situation. And our estimates of City activity – reflected in the sharp fall in the number of City jobs – means that pay has to fall to reflect the underlying economic reality."
The report comes in the midst of a so-called "Shareholder Spring" in the City, where investor pressure over bosses' pay has toppled three of the capital's most high-profile chief executives in recent weeks - Andrew Moss at Aviva, David Brennan at AstraZeneca and Sly Bailey at Trinity Mirror.
Several companies have faced shareholder revolts over pay this year, including banks UBS and Barclays.
However, Mr McWilliams warned a reduced bonus pool among City workers would inevitably hurt public sector services.
"Before anti-City campaigners start jumping for joy, they should reflect on the fact that because City earnings are very highly taxed, the biggest loser of all will be the Treasury, meaning fewer funds available to finance public services," he said.
Source: City bonuses will collapse, says CEBR - Telegraph
New figures from the body show total bonus pots for City of London workers are expected to fall 48pc in the year ahead, down from £4.4bn in 2011-12 and five times below their pre-recession peak of £11.6bn in 2007-8. The last time bonus pots were around the £2.5bn mark was in 1998.
Douglas McWilliams, CEBR chief executive, said: "City remuneration levels are coming back into the real world. Employees are being told, 'Your job is your bonus so don't expect a large sum in addition'.
"More active shareholders are pressing management to remunerate in line with the economic situation. And our estimates of City activity – reflected in the sharp fall in the number of City jobs – means that pay has to fall to reflect the underlying economic reality."
The report comes in the midst of a so-called "Shareholder Spring" in the City, where investor pressure over bosses' pay has toppled three of the capital's most high-profile chief executives in recent weeks - Andrew Moss at Aviva, David Brennan at AstraZeneca and Sly Bailey at Trinity Mirror.
Several companies have faced shareholder revolts over pay this year, including banks UBS and Barclays.
However, Mr McWilliams warned a reduced bonus pool among City workers would inevitably hurt public sector services.
"Before anti-City campaigners start jumping for joy, they should reflect on the fact that because City earnings are very highly taxed, the biggest loser of all will be the Treasury, meaning fewer funds available to finance public services," he said.
Source: City bonuses will collapse, says CEBR - Telegraph
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