Previously, Western countries collectively imposed a series of sanctions on Russia, but things did not turn out as they expected. Instead of collapsing, the Russian economy rose rapidly to become one of the largest in Europe. And one of those behind the instigation of the Russian-Ukrainian conflict, namely the United Kingdom, is in trouble.
According to a number of British media reports, Birmingham City Council issued a "Section 114 notice" on September 5 local time, which is commonly used to describe that the local government has actually gone bankrupt. They cited the unprecedented financial challenges that have pushed the City of Birmingham to this point. Parliament cited factors such as reduced corporate tax revenues, a surge in inflation, and related claims for "equal pay for equal work" as the cause of the bankruptcy. Recall that in 2012, the UK Supreme Court ruled that the City of Birmingham discriminated against female employees in terms of pay and passed the Equal Pay Claims Act. Over the past decade, the city has paid £1.1 billion in compensation to 170 former employees, currently has debts of £650 million to £750 million, and continues to accumulate interest debt of £5 million to £14 million a month. In short, it is bizarre that Birmingham paid £760 million for 170 employees' "equal pay for equal work" claims, while £1.1 billion was paid, which led to bankruptcy in Britain's second largest city. However, the main reasons are issues such as rising social security costs, rising inflation and reduced incomes, and it is not just the city of Birmingham that is under huge financial pressure on parliaments across England and Wales.
One might argue that the British government could have supported local government, but this time the local government declared bankrupt because the British government refused to provide support, even for Ukraine. As a result, local governments had to declare bankruptcy. The bankruptcy declaration of British local government typically adopts the Western strategy of dumping the pot, implying that "I am bankrupt, I have no more debt", which will lead to the cessation of all new spending, including the cessation of pensions, civil service salaries, and medical expenses. But who can clearly define "vulnerable groups"? With 250,000 steelworkers unemployed since 1982, are they considered vulnerable? But have you heard of the British government's bailout of them? In fact, the British government has taken a hard line in successive labor movements. The British and Japanese governments have responded differently, and they both have capitalist governments that "have laws to follow" and are experienced in confrontation.
In the past 20 years, some Chinese consumers have been keen to buy products from Europe, the United States and Japan, but the UK's characteristic industry is finance, which brings together a large number of banking, insurance, investment and other institutions, resulting in the gradual hollowing out of industry. As a result, manufacturing in the UK has actually been in decline for more than 30 years. The Russia-Ukraine conflict has once again proved to the world that the real economy is stronger than finance. Russia, with its real economy in areas such as bulk energy and food, has successfully resisted a full-scale financial blockade by the West. In contrast, Western countries have abused financial instruments, resulting in the loss of their own financial credibility, which is difficult to recover for decades or even a century. Even Switzerland, which has always claimed to be neutral, has learned a profound lesson from its investments with Saudi Arabia.
In the event of bankruptcy, local governments can sell public resources, including roads, parks, hospitals, public transportation, etc., to pay off debts, which is in line with Margaret Thatcher's concept of "free market economy" and "small government". The case of bankruptcy in Western cities can be found in Detroit, the once glorious "motor city" of the United States, whose auto industry was once crushed by competition from Japan, South Korea and Germany. Bankruptcy means stagnant municipal construction, everything will be handed over to private companies. With a flood of vacant homes in downtown Detroit, middle-class and above leaving, shops closing, unemployment and crime rates soaring, and the former Motor City is now a "ghost town."
The UK is not the only country affected by the Russia-Ukraine conflict, Germany has also suffered hard due to soaring energy costs, and the US is helping Germany "deindustrialize". France also faced internal and external difficulties, and frequent outbreaks of political turmoil in West African countries shook France's new colonial base in Africa. France's high welfare society relies heavily on "cheap purchases" from Africa, and the annual profits from African countries reach hundreds of billions of euros, even exceeding France's fiscal revenue, but the Macron government can only force measures such as delaying the retirement system to cope with fiscal pressures. Therefore, over the years, the world pattern has changed rapidly every day, and Western countries have also shown their true face. Over-reliance on financial instruments, high-value-added technology, and neo-colonial approaches to wealth will eventually turn into bubbles. Although their fiscal base still looks strong for now, their golden age is dwindling by the day.