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Scots tight: bankrupt city of Birmingham

Photo: Mike Kemp / In Pictures / Getty Images

In Great Britain, the precarious financial situation of many cities and municipalities could worsen further.

This is indicated by a survey by the Local Government Information Unit (LGIU), an interest group for local government.

Accordingly, 50 percent of the municipalities surveyed stated that their administration could face bankruptcy in the next five years.

Legally speaking, municipalities in Great Britain cannot go bankrupt like a company.

But if the financial problems get out of hand, the authorities have to publish a “section 114 notice”.

As a result, significant portions of expenditure usually have to be cut.

In 2023, three municipalities were already affected, including the country's second largest city, Birmingham.

Many cities and municipalities are now reacting to the deteriorating financial situation by increasing taxes and fees.

90 percent want to increase local taxes as well as fees and charges for services such as parking or the disposal of environmental waste.

Two thirds say they are cutting back on their services.

The report shows “how widespread the desperate financial situation of city councils is,” says the investigation.

Birmingham sells off municipal property

The BBC reported on Wednesday that the maintenance of parks and leisure facilities as well as support for art and culture were particularly affected.

Accordingly, 128 of the 318 English local authorities took part in the survey.

After warnings from several municipalities, the British government announced additional aid worth 600 million pounds (702 million euros) to compensate for budget gaps.

But according to local politicians and experts, that is far from enough.

In September, the city of Birmingham stopped all non-essential spending in order to continue to ensure basic tasks.

Just over a week ago, the council also announced it would sell assets worth £750 million and cut spending on public services by £300 million.