Excessive City bonuses could be a thing of the past, as it emerged that annual payments to City high-fliers will slump by 40% in 2008 to £5.1bn.

In 2007 payouts stood at £8.5bn.

Investment bank Merril Lynch has shed 4,000 jobs this year, while JP Morgan has cut 14,000 employees and KMPG has axed 90 staff. The Centre for Economics and Business Research (CEBR) estimates that 11,000 jobs will go in the City this year.

Dominic Walley, CEBR’s managing economist said: “Don’t expect City bonuses to bounce back. There is a strong perception bankers have been rewarded for getting it wrong.”