LONDON, Dec. 2 (Xinhua) -- Nottingham, an industrial city in central England, recently declared bankruptcy, another "bankrupt city" after Birmingham, Birmingham, Britain's second-largest city, in September this year.
What is a city bankruptcy?What impact will it have on ordinary people in the UK?
The successive "thunderstorms" in British cities are considered an important microcosm of the country's poor economic performance, indicating that more and more local municipalities are facing financial difficulties.
After Nottingham declared bankruptcy, experts feared that more parts of the UK could follow, according to the UK**. However, urban bankruptcy is not the same as bankruptcy in the ordinary sense, and the place where the bankruptcy is declared will still perform the various service functions stipulated by law.
Urban bankruptcy is not the same as paralysis.
On 29 November, Nottingham City Council announced that the city was "unable to achieve the balanced budget required by law this year", having issued a notice under section 114 of the Local Finance Act 1988.
Nottingham City Council issues a Section 114 Notice. (Screenshot of Nottingham City Council's official website).
John Bryson, professor of business and economic geography at Birmingham Business School, explained that the issuance of a "Section 114 notice" is generally considered a declaration of bankruptcy in political or ** terms. However, by law, the UK** or local** "cannot be bankrupt", so the "Section 114 Notice" means that the City of Nottingham will cease all expenditures other than those provided for by law.
Statutory expenditures at the local level include education services, child protection and social care, social care, waste bin collection, planning and housing services, road maintenance, library services, and more. From this point of view, urban bankruptcy is not the same as a "desperate situation" in which municipal services are paralyzed and economic life is suspended.
Nottingham City Council leader David Mellen told the local**: We will continue to pay the bills and we will continue to pay our employees. He also said that the new library, which cost 10 million pounds (90.69 million yuan), would not be closed, but that all non-essential expenditures "must be considered".
Why Nottingham went bankrupt.
According to statistics, since 2018, 12 places** in the UK have declared bankruptcy for varying reasons. In September, Birmingham, the UK's second-largest city, declared bankruptcy over a claim scheme for equal pay for equal work, facing huge compensation. There are also cities that have gone bankrupt due to soaring fiscal deficits due to failed investment.
This is a view of the city of Nottingham, England, taken on August 9, 2022 (drone shot). Xinhua News Agency (photo by Liu Ao).
As the second largest distribution center in the UK after London, how did Nottingham get to where it is today?
Increased demand for child care and ** social services, expanded spending on homeless relief and rising inflation have all put additional pressure on finances, with the city expecting to overspend £23 million in the 2023-24 financial year, Nottingham City Council said, with the city expecting to overspend £23 million in the 2023-24 financial year (2.).0.9 billion yuan).
Nottingham has been plagued by financial problems in recent years and has previously been regulated by the UK**. The city council, which is controlled by the opposition Labour Party, blames it in part on years of underfunding.
According to Bryson, about 22% of the UK's local ** revenue comes from subsidies, and the rest mainly comes from municipal taxes levied on residential basis, as well as commercial taxes paid by bars, restaurants, grocery stores, etc., and the tax increase and revenue channels are extremely limited.
At present, the UK's economic growth has stagnated, 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.
A woman walks past a currency exchange office in Manchester, England, on October 7. Xinhua News Agency (photo by Jon Hupper).
In October alone, inflation in the UK fell to 47%, and the average income in England increased by 34%, coupled with the inflation level in some areas far above average, may reach 8%, inflation alone will bring a big gap to local finances. In addition, the aging population requires increased spending on social services, ......According to a rough estimate, about 1 in 10 of England's 317 places** are facing financial difficulties. ”
What is the impact of bankruptcy?
Nottingham** plans to convene a special meeting over the next 21 days to discuss the problems the city will face if it goes bankrupt and what to do about it.
Bryson noted that typically, the UK will send commissioners to help localities** balance budgets and identify what needs to be cut in the provision of non-essential services.
This is a photo taken at the University of Nottingham in the United Kingdom on September 7, 2022 (drone shot). Xinhua News Agency (photo by Liu Ao).
In the short term, the city of Nottingham's declaration of bankruptcy will not have a huge impact on the lives of ordinary citizens. However, due to severe restrictions on municipal spending, some welfare improvement projects and large-scale infrastructure construction 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. And as cities are labelled as "bankrupt", it affects the prospects for attracting investment in the future. (Reporter: Zhao Xiaona;Editor: Wang Yujue;Editors: Diao Ze, Qiao Ying, Wang Fengfeng, Chen Dan).