Bonus payments rose 4 per cent year-on-year in 2012-2013 amassing to over £39 billion, according to August's Labour Market Statistics released by the ONS. Average weekly earnings including bonus payments also rose by 2.1 per cent, when comparing April to June 2013 with the same period a year earlier, ‘the first time the growth rate has exceeded 2 per cent since late 2011’, said the report.
Marc Cohen, director of London-based wealth insight specialists, Ledbury Research, said that although the spike in bonuses is not significant in itself, it serves as an indication of other factors that suggest liquidity and propensity to spend, is on the rise.
“Really high ticket items such as jets and yachts will probably not be overly impacted by a modest rise in bonuses, as those who will tend to buy them will be multi-millionaires or billionaires…rather than city workers who are paid bonuses,” he said.
“[But] the fortunes of the former are more closely linked to macro-economic and stock market performance, which of course has been on the recovery also, so we are predicting a rise in jet and yacht sales over the next year.”
Adrian Jones, director at Blackstar VAT Services, who advises on tax solutions for new and existing builds, is seeing some modest signs of recovery and stabilisation in his market, which adds some weight to the prediction for the superyacht industry.
Jones, who was handling an enquiry for a new build 60m superyacht at the time of call, said that “business is better this year than last.”
“My work’s been constant since February, although we’re still talking in small numbers rather than hundreds, so I’m feeling cautiously optimistic. Last year was a bit erratic, but this year it appears to be a bit more steady.”
London was recently rated top in Knight Frank’s 2013 global cities study and remains among the leading destinations for UHNWI commercial activity, so it’s also a positive sign that any movement in spending could trickle outside of its borders.
“The majority of super-prime property purchases in London are to Russians, Americans and Middle East UHNWI. This continues to bode well for London, specifically at the very top end of the luxury market,” said Cohen.
The bonus increase itself is also demonstrative of a government that, in the main, puts systems in place to support the growth of top tier wealth, for all the reports of clampdowns on tax havens in recent months. This is because the rise was, in part, owing to workers deferring bonuses until the next tax year to avoid incurring the previous 50 per cent top rate of tax on high earnings (over £150,000).
“The bounce in bonus-led pay rises shows that the super-rich have taken full advantage of the Chancellor's telegraphed tax cut,” said Trade Union Congress General Secretary Frances O'Grady, bemoaning that it is now “boom time for the super rich.” Not something the beleaguered superyacht sales market will be complaining about.