Britain’s second-biggest city declares itself bankrupt

The second-largest city in Britain effectively declared bankruptcy by ceasing all non-essential spending after receiving equal pay claims for up to 760 million pounds (USD 956 million), CNN reported.

Birmingham City Council, which provides services to more than a million people, submitted a Section 114 notice on Tuesday, suspending all expenditures from those for essential services.

According to the notice report, the deficit resulted from difficulty paying equal pay claims totalling between 650 million pounds (about USD 816 million) and 760 million pounds (around USD 954 million).

For the fiscal year 2023–2024, the city now anticipates a deficit of 87 million pounds (USD 109 million).

Deputy leader of the council, Sharon Thompson, told councillors on Tuesday that it faces “longstanding issues, including the council’s historic equal pay liability concerns,” CNN reported citing UK’s PA Media news agency.

Thompson also put a part of the blame on the UK’s ruling Conservative Party, saying Birmingham “had 1 billion pounds of funding taken away by successive Conservative governments.”

She also said, “Local government is facing a perfect storm,” adding, “Like councils across the country, it is clear that this council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates incomes to the impact of rampant inflation.”

“Whilst the council is facing significant challenges, the city is very much still open for business and we’re welcoming people as they come along,” Thompson added.

A spokesperson for UK Prime Minister Rishi Sunak told reporters on Tuesday, “Clearly it’s for locally elected councils to manage their own budgets.” The spokesperson added that the government has been “engaging regularly with them to that end and has expressed concern about their governance arrangements and has requested assurances from the leader of the council about the best use of taxpayers’ money,” CNN reported.

The multicultural city is the largest in central England. A significant athletic event for Commonwealth nations, the Commonwealth Games, was held here last year, and the European Athletics Championships are slated to take place here in 2026, CNN reported.