Recently, some local governments in the UK have been in financial trouble, with a series of bankruptcies. Among them, on 29 November, the Nottingham City Council declared the city de facto bankrupt.
This means that the City of Nottingham will cease all spending except for statutory services and face a range of consequences.
Urban bankruptcies in the UK have ceased to be an accident in recent years. Since 2020, a number of local governments have declared substantial insolvency, including Thurrock, Croydon, Slough and Northamptonshire.
It is predicted that 26 more local governments could be at risk of de facto bankruptcy in the next two years.
In recent years, there have been frequent urban bankruptcies in the UK, raising concerns about the state of the British economy. The reasons for this can be mainly boiled down to the following.
● First of all, the failure of industrial structural transformation is an important cause of urban bankruptcy.
Cities such as Birmingham and Nottingham were once the UK's industrial powerhouses, but as the UK turned to the financial sector, their manufacturing sector gradually declined. Without a healthy industrial base, these cities are unable to sustain their revenues by relying on services such as finance.
● Second, the economic downturn in the UK has also led to the bankruptcy of cities. The UK's economic growth slowed down after Brexit, and many companies moved out, resulting in a decrease in local fiscal revenues.
At the same time, the UK is also facing problems such as inflation and rising energy prices, which make the fiscal situation of local governments more difficult.
● Third, partisanship is also one of the factors that lead to the bankruptcy of the city. Accusations and blame-shifting between different parties make it more difficult to solve the problem.
Limited government support for local governments has made it more difficult for cities that are financially struggling to bail out.
Although bankruptcy can reduce expenses and provide better services to citizens, it is not easy for ordinary people to live in debt. Once a city is labelled "bankrupt", it will be difficult to attract investment again, which will further exacerbate the problem.
For the UK, the only way to solve this problem is for the government to take courageous and honest steps to solve the financial woes, protect the interests of citizens, and restore the economic strength of cities. Only in this way will Britain be able to emerge from the storm of bankruptcy and move towards a better future.