A new British city declares bankruptcy.. What is the reason?

The British city of Nottingham announced that it is in a state of bankruptcy, which means that it will stop fulfilling all spending items except for the services that must be provided by law.

The announcement comes less than two months after the British city of Birmingham went bankrupt, according to a report published by CNBC Arabia, today, Saturday, December 2, 2023.

Huge budget deficit

Nottingham City Council revealed that it is suffering from a large deficit in its budget estimated at 23 million pounds, as the Council's Finance Director stated that it is not possible to provide a balanced budget for this year.

The city council said Nottingham was expected to have a budget deficit of £56.9 million, and after using reserves of £9.4 million and other corrective measures, the deficit was forecast to fall to £23.4 million.

Reasons for the budget deficit

The council explained the reasons for the city's budget deficit, stating that the issue was linked to financial problems affecting city councils across Britain such as increased demand for social care for children and adults, a rise in the number of homeless people, and the implications of inflation.

It also acknowledged that previous problems related to financial governance and wasteful spending in the previous fiscal year played a negative role, however the Board acknowledged that it had sufficient financial resources to meet all its current obligations.

Suspension of spending items

The current announcement means that all spending items other than protecting vulnerable people and providing legal services will be suspended, and a meeting is scheduled to be held within the next three weeks to discuss the situation.

Two months ago, the British city of Birmingham declared bankruptcy, due to financial problems related to the city council's failure to pay a financial bill worth 760 million pounds to compensate those affected by unequal wages.

Electricity crisis in Britain

In the same context, the British electricity grid operator asked households to reduce electricity use on Friday evening, as freezing weather and reduced electricity generation from wind plants put pressure on supplies.

The grid operator requested a reduction of 550 megawatts, the equivalent of one nuclear reactor, between 4:30 pm and 6 pm London time to help balance supply and demand, according to a statement issued by the electricity system operator, National Grid Plc. This is the second time in a week that households have been asked to reduce consumption to ease peak consumption in the evening.

EUR 35 million for the Brazilian Amazon Fund

On the other hand, The UK has pledged an additional €35 million ($38.1 million) to the Brazilian Amazon Fund, an international conservation initiative that aims to end deforestation in the world's largest rainforest by 2030.

The UK will also transfer 80 million euros to the Brazilian development bank, BNDES, in fulfillment of a commitment made in May by Prime Minister Rishi Sunak during President Luiz Inacio Lula da Silva's visit to London, according to a statement issued on Saturday in United Nations Climate Change Conference (COP28) in Dubai.

The Amazon Fund ceased operations in 2019 when Germany and Norway froze contributions in response to former President Jair Bolsonaro's environmental policies. These efforts resumed after Lula's inauguration as president in January, and became the focus of the leftist leader's efforts to put climate change and environmental protection at the heart of his global agenda.