The Nobel Foundation has become the latest austerity victim after announcing that the prize money awarded to laureates will be cut by 20 per cent following a series of unfortunate investment decisions.
Last year 12 Nobel winners were honoured in Stockholm during a week of lavish receptions, banquets and performances from leading orchestras.
The Nobel peace prize is handed out at a separate ceremony in Oslo. But the body has admitted it has to cut costs. This year, the money for the Nobel prizes, given for excellence in the fields of science, literature and peace, will fall from 10 million to eight million Swedish krona (£728,000). It will be the first reduction in the face value of the prize since 1949.
Despite recognising the world's greatest geniuses, the Foundation has proved fallible when it comes to making investments with the capital donated in the will of dynamite inventor Alfred Nobel.
The foundation said that the costs of the prizes and operating expenses had exceeded returns from interest and investments on the capital over the past decade, making it necessary to lower the prize money. The Foundation's invested capital was valued at $419m (£270m) at end of 2011, down 8 per cent from the previous year. The endowment is invested in 50 per cent equities, 20 per cent fixed-income investments and 30 per cent alternative assets.
A committee will determine how to reallocate the portfolio, and administrative costs are also being cut.
"It is the Nobel Foundation that is responsible for the prize money remaining at a high level over the long run," said Lars Heikensten, the chief executive. "We have made the assessment that it is important to take necessary measures in good time."
He added: "There is a lot of turbulence in financial markets, a crisis, and there is also reason to believe that we may have a number of quite difficult years ahead. We think it is wise to act now before it is too late."
Adjusted for inflation, the eight million krona figure matches the 150,782 krona presented when the awards were first handed out in 1901.