Bonuses in the City of London will plummet to just a third of what they were before the recession, according to a UK think tank.

The Centre for Economics and Business Research forecast total bonus payouts in the City of £4.2 billion (about $6.7 billion) for 2011/2012, representing a 38 per cent drop year-on-year.

The projection puts the level of  bonus  payments  to  just  over  a  third  of  the  £11.6  billion peak seen just before the credit crunch in 2008. The last time a lower level of bonuses paid was in 2002/03, the think tank said.

“Although I wouldn’t want to be a Porsche salesman now with the fat cats having to tighten their belts, the  real  losers  from  falling  bonus payments are the treasury (the UK finance department) and the taxpayer,” said Douglas McWilliams, chief executive of CEBR.

The think tank says that the figures demonstrate how London’s position as a world-leading financial centre is under threat, and that the Asian centres of Hong Kong and Singapore are rapidly closing the gap. Singapore, which has a higher percentage of millionaires than any other place in the world, is turning into the world’s wealth management capital.

CEBR says the main reason behind the plunge is a much weaker City economy as a result of turmoil caused by the debt crisis in the eurozone and weak third quarter results. However, wealth management operations have been a light in the tunnel for many banking groups.

The level of City bonuses will remain subdued until at least 2015, the think tank thinks says, despite its prediction that growth will pick up substantially in 2013.