Britain bankruptcy: This UK city has declared itself bankrupt

Britain's second-largest city has reportedly declared itself bankrupt and has shut down all non-essential spending after being issued with equal pay claims totaling £760 million (USD 956 million).

According to a CNN report, the deficit arose due to difficulties paying between around USD 816 million and around USD 954 million in equal pay claims.

Birmingham City Council said it has a deficit of £87 million (USD 109 million) in the current financial year and also faced "a potential liability related to equal pay claims in the region of £650 million to £760 million."

Sharon Thompson, deputy leader of the council, said it faced " longstanding issues, including the council's historic concerns about equal pay". Thompson also blamed the ruling Conservative Party, saying that Birmingham had been "taken in £1 billion in funding by successive Conservative governments".

The Labor administration representing Birmingham issued its so-called Notice 114, ending all but essential spending and becoming the latest in a series of councils to plunge into financial difficulty.

Sharon added that while the council faces significant challenges, the city remains open for business.

Meanwhile, British Prime Minister's spokesman Rishi Sunak said that the responsibility for effective budget management rests with the elected councils.

Birmingham City Council's bankruptcy reason:

One of the main reasons for the city's bankruptcy is the equal pay claim. The city authority said it was forced to pay up after the Supreme Court ruled in 2012 in favor of a group of employees, mostly women, who had missed out on bonuses given to employees who served traditionally male-dominated roles on the board. It has already paid more than £1 billion on equal pay claims and has been hit by the costs of a new IT system.

The council also blamed "unprecedented financial challenges", including inflation, growing demand for adult social care, and “dramatic reductions" in income from business taxes.

The Council issues a section 114 notice when it believes its income will not be able to meet spending. It is widely reported as effectively bankruptcy for a council, meaning it cannot make new spending commitments. This often leads to a new budget with lower expenses.

Birmingham is a multicultural city in central England, which also hosted the Commonwealth Games last year. The European Athletics Championships are scheduled for 2026.

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