City bonuses pass £7 billion mark
Published 05/10/2010 | 00:22
Anger over City workers' pay packets is likely to be fuelled by new figures showing cash bonuses hitting £7 billion this year.
The Centre for Economics and Business Research (CEBR) said pre-tax City bonuses are continuing to recover to pre-credit crunch levels, although slightly lower than last year's pot of £7.3 billion.
Bankers and other City workers, such as fund managers, have largely been blamed for the financial crisis and recession.
But the CEBR said the taxman will take home more of this year's £7 billion bonus pot, which excludes share windfalls, after the new tax rate of 50% on incomes over £150,000 came into force.
Benjamin Williamson, CEBR economist, said: "Our research shows that the public coffers stand to gain considerably more from City bonuses than City workers themselves."
He added: "A whopping £7 billion bonus payout will be easier to stomach if the lion's share goes to the nation."
City workers - staff in investment banking, equities and bonds, derivatives, corporate finance and fund management - will take home around £3.2 billion after paying national insurance and income tax, CEBR said. But the Government will take around £4.1 billion in tax, as employers also have to pay main rate national insurance contributions of 12.8%.
Prime Minister David Cameron said people would be "angry" about the latest figures.
"I think the Chancellor was pretty clear yesterday when he said if these people go on paying themselves big bonuses and not lending money to the small businesses that need to get our economy going, he won't stand idly by," Mr Cameron told BBC Breakfast.
"People will be angry about this because people do see that the banks got out of control. That was part of the problem that contributed to our debts and our deficit, but the (former) Labour government have a very big share of the responsibility too."