Europe's largest local council, the Birmingham's city council, has issued a Section 114 notice prohibiting all but required spending to safeguard core services.

The constraints are related to a £760 million obligation to resolve equal pay claims.

The Labour Authority's head and deputy leader Sharon Thompson said in a joint statement with Council leader John Cotton that the decision was a "necessary step as we seek to get our city back on a sound financial footing."

Cotton and Thompson remarked that "unprecedented financial challenges" resulted from a range of factors like increased demand for adult social care as well as rampant inflation.

Read more: Inflation in  the UK forces households to cut on luxury spending

They also explained they have requested additional support from the Local Government Association, noting that the issuing of the 114 Notice is an essential step to put the city "back on a sound financial footing."

Moving into uncharted waters

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Rishi Sunak called on the elected officials to "manage their own budgets," after Downing Street reacted to the announcement, calling it "concerning" for residents of the city.

According to Liberal Democrat group leader Roger Harmer, "Every one of Birmingham's citizens will feel the pain of this decision as we move into unchartered waters."

The notice means social care and education will continue to be funded and non-essential provision could affect parks, roads, libraries, and cultural projects.

Prof Tony Travers, a local government expert at the London School of Economics, stated that Birmingham City Council has been experiencing financial difficulties "on and off" for more than a decade owing to equal pay and other issues.

He told BBC Radio WM that "Birmingham is a very important city within Britain and it is essential for the whole country that its services are good and that the city is seen to be motoring forward."

"The risk is that the city council's provision of services will be trimmed further and further back and that has consequences not only to what the city looks like and feels like to live in, but also the reputational hit to the city as well."

The largest Birmingham City Council staff union, GMB, called the news a "humiliating admission of failure" on the part of the council's leadership.

According to organizer Michelle McCrossen, "Not only are they responsible for creating this crisis through years of discriminating against their own staff, but even they no longer believe themselves capable of fixing it."

McCrossen pledged the union would fight to bring those responsible to justice.