Birmingham declares itself bankrupt - What is going on?

[cern]

Where is this gonna lead? Is it possible that a country can allow Cities running out of money like that? 
What is the major consequence of this for British people living in Birmingham? Is this consequences of Brexit? 
 

Quote

he crisis in local authorities was laid bare on Tuesday as Birmingham city council in effect declared itself bankrupt, with experts warning that others across the UK were now living “hand to mouth”.

The council’s head of finance took the dramatic decision on Tuesday to issue a section 114 notice, indicating that it did not have the resources to balance its books.Woking, Croydon and Thurrock are among the other councils to have made similar announcements recently after botched investment projects and deep funding cuts.

But the contagion spreading to Europe’s largest local authority, which hosted last summer’s Commonwealth Games, is likely to intensify pressure on Rishi Sunak’s government over the legacy of 13 years of austerity.

The deficit arose due to difficulties paying between £650 million (around $816 million) and £760 million (around $954 million) in equal pay claims, the notice report says.  The city now expects to have a deficit of £87 million ($109 million) for the 2023-24 financial year.

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[Nebraska]

3 minutes ago, cern said:

 Is it possible that a country can allow Cities running out of money like that? 

yes. just ask anyone from the D

[milkface]

The effects of COVID and general mismanagement in the council will have contributed too. If I remember correctly Nottingham was having financial issues between 2020-2022.

Edited September 6, 2023 by milkface

[ignatius]

happens all the time.. some time in a kind of catastrophic way. in the 90s Orange County, CA had some issues because they invested in junk bonds or something.. lot's of other people did too and when it collapsed they lost all their money. some pension funds were in it too. 

[chenGOD]

14 hours ago, Nebraska said:

yes. just ask anyone from the D

And the recovery is slow and ongoing, but at least they have recovered: https://www.detroitnews.com/story/business/2023/08/31/um-report-detroit-economic-outlook-strong-but-only-36-of-residents-make-living-wage/70721676007/

[logboy]

austerity, too much of it for too long, leading to risky investments and attempts at finding new sources of money.

thing is … it was a choice, and continues, with the attitude that there’s no alternatives continue. hence no reassessment of wealth and taxes at high end of earners. 

it’s false economy, dropping investment. maintain in real terms, or increase it. the cost of correcting it has increased due to inflation, and the damage knock on effects for people are huge and varied.