The Centre for Economics and Business Research was the bearer of bad tidings yesterday. And it is the bearer of bad tidings today.
Yesterday, it said City jobs were in free-fall (see graph) and won’t recover in the near future (before 2016).
Today, it says pay is in free-fall and that bonuses paid out in the City for 2012 will be 48% lower than they were for 2011 (see chart).
It predicts the average bonus this year will be…£9k. In 2006 and 2007, the CEBR put the average at £33k.
To emphasise the pain, it points out that the 255,000 jobs extant in the City this year are on a par with employment levels in 1996. And the predicted £2.3bn bonus pool is on a par with the £2.5bn bonus pool of 1998. We are regressing to the 1980s.
Reassuringly, like Keynes the CEBR has been known to alter its forecasts when the facts change. This time last year, it was predicting a £7.4bn bonus pool for 2012 and 325,000 jobs. Positive revisions to this week’s forecasts can’t be ruled out. Nor can negative ones.
However, the CEBR seems quite confident in its prognosis. “Using Cebr’s model which is based on City activity and which forecast bonuses for last year fairly accurately, the predicted level of bonus for 2012/13 is a further sharp fall to £2.3 billion,” it insists.
Yesterday's bad news:
Today's bad news (this being the size of the London bonus pool):