UK’s second largest city, Birmingham declares bankruptcy

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City Hall warned this Wednesday (6) that it is no longer able to pay the municipality’s bills, about 2.2 million people, who may be without basic service. Central government austerity and a sentence to match employees’ salaries helped to collapse local accounts. People cross the street in Birmingham, UK, a city that declared bankruptcy on September 6, 2023. Kirsty Wigglesworth/ AP The city of Birmingham, the second largest in the United Kingdom, declared bankruptcy this Wednesday (5). The city hall issued a notice that it is no longer able to pay the municipality’s bills, compromising the public services of around 2.2 million people. 💸 Bankruptcy, unprecedented in the country, is the result of more than a decade of austerity policies by the British central government, which put pressure on municipalities and led them to financial limits. A series of logistical errors by the city hall also contributed to the situation (read more below). This morning, the city then warned the central government of a gap in this year’s Budget of around 87 million pounds (about R$ 541.38 million pounds). When notifying the central government that it is no longer able to pay the municipality’s bills, the city hall said that only funds for the protection of vulnerable people and essential services are released. With the bankruptcy of the city hall, the central government takes over the bills, but activates measures such as: Cuts in basic and non-basic services; Increase in local taxes; Sale of public properties; Sale of other avitos. Origin of the crisis In addition to the tightening of public accounts imposed by the harsh austerity policy adopted by the British government after the financial crisis of 2008 in Europe, the city of Birmingham also faced local episodes that helped to collapse the accounts: In one of them, the local contracted an Information Technology system to handle internal data. The initial value of the service was 19 million pounds (around R$ 118 million). But the installation ended up delaying almost three years. In the meantime, the Ukraine war came, and inflation soared, pushing the final cost of the service to around £100 million. In another case, in 2010, a court decision ruled in favor of a group of 5,000 female employees who had filed a joint action claiming that they earned lower wages to perform the same functions as men in public services. There were cases of bonus payments to employees and non-employees. To equalize the picture, the city hall had to disburse around 1 billion pounds (about R$ 6.22 billion). This Wednesday, the deputy leader of the mayoralty, from the Labor Party, apologized to the population. But conservative opposition deputies accused mayoral leaders of lying to voters about the city’s finances. Seven years after Brexit, the UK has the highest inflation in four decades

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