August 17, 2006
By Sarah Butler
DIRECTORS and City bankers are in line for bumper bonuses this year after an estimated 16 per cent rise in the spring payouts.
The Office for National Statistics’ annual assessment of the scale of bonuses said that the payouts rose by £2.5 billion this year to an estimated £19 billion.
The rise follows a £1.5 billion increase last year, suggesting a 25 per cent rise over two years.
Bonuses for financial services workers account for by far the largest chunk of the payouts, about £10 billion overall. Many banks have reported record profits this year as the stock market has revived and acquisitions and mergers boomed. At the same time profits are rising at major British companies such as BP, Shell and Tesco, leading to big payouts for directors.
In the past, big City bonuses have driven fears of interest rate rises as the fortunate few splash out on flash cars and new homes.
Last autumn expectations of big City bonuses electrified the luxury homes market. Rightmove, the property website, recorded a 16.3 per cent increase in house prices in Kensington and Chelsea in the five weeks to November 12.
Last week the Royal Institution of Chartered Surveyors reported that demand from City bankers had helped to push farmland prices to record levels.
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