China News Service, London, December 12 (Reporter Ouyang Kaiyu) "There is a problem with the operation of this country, and the same is true for the operation of the city. Regarding the news of the bankruptcy of Nottingham, citizen Johnson said in frustration that the local government went bankrupt, and it was the local residents who were bearing the burden of life.

The city of Nottingham, the capital of Nottingham County in central England, has recently declared de facto bankruptcy. Nottingham is an important industrial city in the UK and the second largest trading hub after London, ranking 2019th on the list of the world's top 500 cities in 108.

Citing section 1988 of the Local Government Finance Act 114, Nottingham City Council said it was projected to overspend £2023 million in the 2024-2300 financial year due to the Council's failure to control the need for social services care for children and adults, as well as growing spending on homeless relief, which has now been "pushed to the brink" and forced to declare bankruptcy. According to the city council, the authorities have been unable to provide a balanced budget. The Nottingham authorities will meet in the next 21 days to discuss the problems they will face and what they will do to deal with the insolvency.

Three Nottingham MPs, Nadia Whitom, Alex Norris and Lillian Greenwood, said in a joint statement: "The government's failure to grasp the unprecedented surge in demand for social care and homelessness has now pushed City Council to the brink of collapse, forcing it to issue a Section 114 Notice".

In the short term, the city of Nottingham's declaration of bankruptcy will lead to severe restrictions on municipal spending, and some welfare improvement projects and major infrastructure construction projects will be put on hold for the time being. Local people fear that the quality and efficiency of statutory services such as public security and transportation will be compromised due to tight local finances. As cities are labelled as "bankrupt", the prospects for attracting investment in the future will also suffer.

Britain's local finances are relatively independent, and the British Prime Minister's Office has said it will not bail out Nottingham. 10 Downing Street also said the government had previously increased funding for local councils, which should be accountable for their own budgets.

More than two months ago, Birmingham, Birmingham, the UK's second-largest city, declared bankruptcy, linked to the high claims bills it was carrying. Previously, more than 100 women in the city's education, catering and other industries sued the city of Birmingham for equal pay because their pay was worse than that of men in the same position, and the Supreme Court ruled in their favor.

Since 2012, the City of Birmingham has paid nearly £11.7 billion in reparations for the matter. In July, the city government revealed that £7 million in related reparations had yet to be paid. Birmingham City Council said the cost of equal pay claims was rising at a rate of £6 million to £500 million per month, and that the city had to fund the compensation debt that had accumulated so far but did not have the resources to do so, so it suspended non-essential spending in July.

When Birmingham declared bankruptcy, the Special Interest Group for Municipalities, a group of 47 local governments in the UK, warned that about 26 local authorities could go bankrupt in the next two financial years, and the chairman of the group, Houghton, said there were "fundamental systemic problems" in the UK's local government finance system, leading to a growing number of councils approaching the brink of bankruptcy.

At present, the UK's economic growth is stagnant, and under the triple pressure of high inflation, high debt, and high interest rates, more and more local governments are unable to sustain their finances. The bankruptcy of local governments in the UK is already looming. Since 2020, six UK local governments – Thurrock, Croydon, Slough and Northamptonshire – have declared bankruptcy, with Birmingham being the seventh and Nottingham being the eighth.

According to media analysis, the inflation rate in the UK has surged since mid-2022, reaching 11.1% at the end of last year, a 40-year high. Subsequently, the inflation rate remained in the double digits for several months. While inflation is now down to 4.6%, it is still well above the Bank of England's target of 2%.

The Institute of National Economic and Social Research, a British think tank, pointed out that the British economic downturn has made it difficult for local governments to continue, the Russia-Ukraine conflict has further stimulated the rise in energy and commodity prices, the supply chain crisis caused by the new crown epidemic, and the sequelae of Brexit are gradually emerging, etc., all of which have become challenges for the British economy.

Some analysts have also pointed out that about 1 in 10 local governments in the UK are at risk of bankruptcy, and Nottingham is not the first and will not be the last. In the face of the accumulation of local debt and the decline in fiscal revenue, the risk of urban bankruptcy can only be resolved by clarifying the fiscal relationship between the central and local governments and opening up channels of mutual support on the basis of achieving sustainable macroeconomic growth. (ENDS)