Birmingham City Council, Europe's largest local authority, has declared Effective Bankruptcy and will cease all but essential spending. The council faces a potential liability of £650 million to £760 million to settle equal pay claims, equivalent to its entire annual spending on services. Additionally, the council is dealing with financial pressures due to the implementation of a new IT system and challenges in adult social care demand and business rates income. The Section 114 notice means the council cannot balance its budget and will prioritize core services while seeking additional support.

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