Britain's second-largest Birmingham city has reportedly declared itself bankrupt

The second-largest city in Britain is said to have declared bankruptcy and stopped all non-essential spending after receiving equal pay claims for up to £760 million ($956 million).

CNN said that the deficit resulted from issues paying equal pay claims totaling between $816 million and $954 million.

Birmingham City Council reported a deficit of £87 million ($109 million) for the current fiscal year and a possible liability of between £650 million and £760 million related to equal pay claims.

Sharon Thompson, the council's deputy leader, stated that the organisation has long-standing problems, such as worries about its historical equal pay liability. Thompson also pointed the finger at the dominant Conservative Party, claiming that successive Conservative administrations had cut $1 billion in financing to Birmingham.

Government issued  a  "114 notice"

The Labour-led government in Birmingham issued a "114 notice," stopping all but essential spending and making it the most recent municipality to experience financial trouble.

Although the council is dealing with serious difficulties, Sharon continued, the city is still very much open for business.

A representative for UK Prime Minister Rishi Sunak stated that elected councils are in charge of good budget management.

Factor behind this bankruptcy

The equal pay lawsuit is one of the main factors contributing to the city's bankruptcy. The city's authority said that it was compelled to make the payments as a result of a Supreme Court decision in 2012 that sided with a group of mostly female workers who were excluded of bonuses paid to employees in typically male-dominated professions at the council.

The equal pay claim has already cost them more than £1 billion, and a new IT system also cost money.

The council further attributed the situation to "unprecedented financial challenges," such as inflation, an increase in the demand for adult social services, and "dramatic reductions" in corporate tax revenue.

When a council thinks its income won't be enough to cover expenses, it will issue a Section 114 notice. According to numerous reports, a council effectively declares bankruptcy and is unable to commit to further spending. It frequently results in a new budget with lower spending.

A multicultural city in Central England, Birmingham also served as the host city for the Commonwealth Games in 2014. The 2026 European Athletics Championship is slated to occur there.

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