City salaries up 7pc despite a fall in bonuses

BANKERS are receiving bigger pay increases than the rest of the UK despite being paid less in bonuses, new research yesterday showed.

Bumper pay rises offset a fall in year-end bonuses last year, with salaries up an estimated seven per cent in 2010 – far outstripping the two per cent average wage growth across the UK.

In contrast, bonus payouts fell by eight per cent, or £600m, in the 2010 fiscal year, to £6.7bn from £7.3bn in 2009, the Centre for Economics and Business Research (CEBR) found.

Despite the trend to higher salaries, the CEBR estimates that bonus payments will rise above £7bn again this year and continue on a rising path in 2012 and 2013, to reach £8.2bn in 2014. Bonuses peaked at £11.6bn in 2007 before falling to a low of £5.3bn in 2008.

Chief executive Douglas McWilliams said CEBR research showed that regulators should address excessive remuneration by stimulating more competition in the financial sector, not heaping more regulation on banks. “There is a risk that excessive micro-management and regulation of pay in the City by government could accelerate the shift in financial services from the West to the East,” he said.