Billions more for bankers as City workers are handed £6.8bn bonuses

City workers will be handed bonuses totalling an astonishing £6.8billion this year.

They will receive an average payout of around £70,000 - almost three times the entire salary of a typical worker elsewhere.

Despite widespread anger over City pay, the bonus pool will be £750million bigger than last year, research reveals today.

Critics described the payouts as 'sickening', coming so soon after the recklessness of the banking industry triggered a global recession.



Bumper bonuses: Goldman Sachs is among the investment banks paying massive bonuses to staff

Long-term unemployment has soared to its highest level for 13 years, while many workers have been forced to accept pay freezes or cuts as businesses struggle to cope.

The Centre for Economics and Business Research predicts the City windfalls will rise even further over the next two years.

The consultancy forecasts they will soar to £7.2billion in 2011 and £7.7billion in 2012.

Brendan Barber, general secretary of the Trades Union Congress, said: 'Ordinary people will not understand why City bonuses are on the rise again.

'The economy is still fragile. Businesses can't get the loans they need, public and private sector workers are frightened of losing their jobs, yet the banks and finance houses that caused the crash are laughing all the way to the City champagne bars.'

LibDem Treasury spokesman Lord Oakeshott said: 'The size of their bonus pool is simply sickening.

'How can they keep giving their £70,000 V-signs to the rest of Britain?

'Year after year, Labour bent over backwards to please the bankers so now they're morally bankrupt to curb this gross greed.'

To rein in risk-taking, the party is calling for all bonuses in excess of £2,500 to be paid in shares redeemable only after five years.



Critics: LibDem Treasury spokesman Lord Oakeshott, left, and union boss Brendan Barber have hit out at banks over the bonuses



This year's bonuses will be shared by around 100,000 City workers in fields including investment banking, hedge funds and foreign exchange. It excludes insurance workers.

In 2009, they shared a bonus pot of £6billion, but the CEBR predicts that this will rocket to £6.76billion this year - an inflation-busting jump of 12.4 per cent.

The bonuses come on top of their salaries, which according to official figures average about £70,000.



Today's report comes days after two of the world's biggest investment banks revealed that their bonus pools are growing.

On Tuesday, Goldman Sachs revealed £3.6billion in pay and bonuses for its bankers for just three months' work.

In an extraordinary display of arrogance, the announcement came days after the Wall Street giant was charged with a £650million fraud.

Its 33,100 staff 'earned' an average salary and bonus of £108,000 between January and March, although the exact size of their payouts will not be decided for many months.

On Wednesday, arch-rival Morgan Stanley said it has set aside £ 2.9billion for its pay and bonus pool for the first three months, more than double last year's pot.

City bonuses have been condemned by all the major political parties.

In the Chancellor's debate, Shadow Chancellor George Osborne said the size of the payouts 'beggars belief', citing the alleged £63million paid to Barclays president Bob Diamond.

Business Secretary Lord Mandelson has also singled Mr Diamond out as the 'unacceptable face' of the banking sector, although Barclays insist the disputed figure is a 'total fiction'.

In the LibDem manifesto, leader Nick Clegg said: 'Doesn't it make you angry that the banks have been allowed to ride roughshod over our economy, and are still handing out bonuses by the bucket load?'

The bonus pool is large, but it is far from a record.

In 2007 - the year the credit crunch struck - total payouts were more than £10.2billion.

But the taxman will take a much larger chunk of their rewards since the introduction of the 50 per cent tax band on income over £150,000.

Benjamin Williamson, CEBR economist and co-author of the research, said: 'The recent change to the tax system has shifted the balance of rewards from City bonuses in favour of the Government.

'Despite contributing billions of pounds in tax already, the public's appetite for a larger slice of City bonuses will not go away.'