City bonuses are set rise by 50% to £6bn compared with earlier in the year, according to research by the centre for economics and business research (cebr).

cebr has upwardly revised its April 2009 forecast for bonus payments next year from £4.1bn due to better than anticipated second and third quarter profits for many leading financial institutions.

Benjamin Williamson, cebr economist and co-author of the research, says: “Bonuses are beginning to bounce back but will not reach the levels of 2007 anytime soon. Profits of major financial sector institutions have jumped sharply; therefore bonuses, which to some extent are a profit sharing scheme have also risen.

“Banks profits have risen sharply this year, reflecting a lack of competition in the market. It is not surprising that the increase in bonuses has matched these higher levels of profitability. Any attempt to deal with bonuses is likely to be either unsuccessful or very damaging unless it addresses the issue of lack of competition which is at the heart of the sharp rise in profitability.”

City bonus payout

Year    £m   
2001   3,921   
2002   3,329   
2003   4,893   
2004   5,695   
2005   7,130   
2006   10,059   
2007   10,241   
2008   4,008   
2009   6,012   
2010   6,654   
2011   7,098   
2012   7,546