NEW YORK/LONDON: Bankers in New York and London are bracing for year-end bonuses that recruiters estimate are 30% to 50% lower, while some may receive none at all as dealmaking sputters and economic gloom sets takes hold.

Financiers face disappointment when their compensation awards land in the first quarter, and thousands more of their colleagues could be laid off after hundreds were let go this year, according to recruiters and compensation experts.

Last year, the industry handed out the biggest awards since 2006 as the economy roared back from the pandemic.

But this year, the pace of mergers and acquisitions and stock offerings dramatically slowed as debt financing markets collapsed and stock market volatility hurt valuations. The outlook for a recession also increased as the year progressed with the Federal Reserve aggressively raising interest rates to tackle inflation, cooling economic activity.

For US managing directors at Goldman Sachs Group Inc , leaner times will probably translate to a 40% to 45% decline in average compensation for 2022, according to data provided to Reuters by Sheffield Haworth, a recruitment firm for top executives.

At rival Morgan Stanley, average pay for senior bankers is forecast to slide 35% to 40% according to the report authored by Julian Bell, Sheffield Haworth’s head of the Americas and Natalie Machicao, a vice president.

It’s a head-spinning reversal for dealmakers who racked up record profits for their firms last year and clinched eye-watering payouts for themselves.