Broke Britannia: Can Britain Learn From A Global Malaise?

By Ed Scholz and Cleo. C

Britain's once-mighty industrial hubs are wheezing. Birmingham's recent bankruptcy is a stark reminder, but the financial strain gripping cities isn't a uniquely British phenomenon. Across the pond, from the Windy City to the City of Angels, many American and Canadian metropolises teeter on the brink.

The blame game is a well-worn path. City councils, often divided along ideological lines, point fingers at national funding cuts. Austerity measures [1] have undoubtedly squeezed budgets, especially in traditionally blue-collar bastions that saw funding slashed by as much as 30% over a decade [7]. However, some cities, in a misguided quest for efficiency, outsourced servicesonly to find themselves saddled with higher costs down the line [2].

The real crux lies in a nasty fiscal trilemma. Bail out essential services and risk ballooning debt (think Detroit's 2013 bankruptcy with a staggering $18 billion in liabilities) [3]? Slash spending, leaving residents facing cuts like Birmingham's fortnightly trash collection [8]? Or gamble on default, sacrificing future infrastructure upgrades?

A Global Malaise: Cities on the Brink

• United States:

  • Chicago, Illinois: Grappling with teacher strikes [4] and a decline in manufacturing jobs, Chicago faces a tough road ahead.
  • Detroit, Michigan: Though recovering somewhat from its 2013 bankruptcy, Detroit remains a cautionary tale of fiscal mismanagement.
  • Los Angeles, California: Strained by a post-pandemic tourism slump and a growing homeless crisis, Los Angeles needs to find new revenue streams.
  • Baltimore, Maryland: Baltimore struggles with a high crime rate and a shrinking tax base, hindering its ability to deliver essential services.

• Canada:

  • Windsor, Ontario: Heavily reliant on the now-volatile automotive industry, Windsor needs to diversify its economy to ensure long-term financial health.
  • Saint John, New Brunswick: The decline of shipbuilding has hit Saint John hard. The city needs to find new economic engines to replace these lost jobs.
  • Calgary, Alberta: The recent oil price slump has taken a toll on Calgary's economy. The city is now exploring ways to lessen its dependence on the oil and gas industry.
  • St. John's, Newfoundland and Labrador: St. John's faces shrinking oil revenues and a high unemployment rate. The city must find ways to stimulate its economy.

Learning From New York's Fall

New York City offers a chilling premonition for Britain's woes. The Big Apple, once a symbol of resilience, seems to be crumbling again. Rising crime necessitates National Guard patrols in subways [9]. Store closures scar the cityscape, and an influx of migrants strains resources [10]. To top it off, congestion pricing threatens to further squeeze residents [11].

Britain's cities stand at a crossroads. Birmingham's fall is a stark warning, but there's hope. By learning from the mistakes of others, British cities can develop innovative financing models and avoid a similar fate.

Sources:

[1] Tite, M., Bevan, P., & Hale, S. (2020). Austerity, devolution and local government financial resilience in England. Local Government Studies, 46(12), 1830-1848.
[2] James, S., Davies, J., & Gallanger, S. (2018). The outsourcing of public services in the UK: A critical review. Public Policy and Administration, 33(2), 142-162. [3] Greenwood, P. J. (2014). Can American cities go bankrupt? The University of Chicago Press. [4] The Chicago Teachers Union. (n.d.). History of CTU Strikes. https://www.ctulocal1.org/about/history/ [7] Institute for Fiscal Studies. (2022, March 3). The impact of austerity on local government spending. https://www.ifs.org.uk/publications/14845 [8] BBC News. (2024, September 12). UK's second biggest city declares financial distress. [https://www.bbc.co.uk/news/uk-england-birmingham-66730165](https