Budget deficit leads to bankruptcy of a local council in the UK

In a statement released by the Nottingham City Council local government, it was stated that the council would be unable to fulfill its legal obligation to balance its budget this year.

The statement noted that the council, which is led by the main opposition Labour Party, has effectively declared bankruptcy by invoking Section 114 of the Local Government Act.

Nottingham City Council has become the second local government to go bankrupt this year, following Birmingham City Council's declaration of bankruptcy in September due to a budget deficit.

"WE ARE NOT THE FIRST COUNCIL TO GO BANKRUPT"

Nottingham City Council Leader David Mellen stated to Sky News that they would continue to pay council staff, but would not spend beyond their budget for this financial year.

Mellen said, "We have been underfunded for 13 years, and the pressures arising from services are pushing us. Many other councils are in a difficult situation. We are not the first council to go bankrupt, and we will not be the last. We are not incompetent. The government has not funded us properly."

News Source: AA