Market slide clips bankers' pay rises

STOCK market turmoil and economic uncertainty cut City pay awards in the first four months of the year. A survey by Industrial Relations Services found that the average financial sector pay increase was 3% between January and April, down on the 3.3% of a year ago.

Bonuses were also lower, averaging between 2.6% and 3.5%, compared with between 3% and 3.75% in 2002. IRS predicted pay awards of around 3% for the foreseeable future.

At National Australia Group Europe, increases averaged 4%. Performance-related bonuses averaged 7.2% for managers and 4.4% for clerical staff.

Royal Bank of Scotland gave rises averaging 3.7%. Staff also received bonuses worth 10% of annual salary under a profit-share scheme.

HSBC clerical staff received a 2.5% increase, and managers 3%. An incentive scheme gave employees the opportunity for bonuses worth up to 36% of basic salary. Salaries at Abbey National rose 2.55%.

IRS Pay and Benefits Bulletin Editor David Carr said: 'There are some tentative signs of a recovery in stock markets and the wider economy. Whether this shores up investor confidence in the short term remains to be seen and further job losses cannot be ruled out.'

London's economic fightback gathered pace last month as the private sector staged its strongest growth spurt for 10 months.

The capital was in the vanguard of a rally in the economy, according to the Royal Bank of Scotland's Purchasing Managers' Index (PMI) out today. Its overall business activity index saw London soar to 55.7 in July from 53.1 in June, due to a strong performance from the service sector.