Birmingham City Council has declared itself in financial distress over multimillion-pound liabilities to settle equal pay claims.
In a statement, the UK's second biggest city confirmed that it had issued the declaration that it cannot balance its books.
It said all new council spending in the city, with the exception of protecting vulnerable people and statutory services, must stop immediately.
A Birmingham City Council spokesperson said: "Birmingham City Council has issued a s.114 notice as part of the plans to meet the council's financial liabilities relating to equal pay claims and an in-year financial gap within its budget which currently stands in the region of £87m.
"In June, the council announced it had a potential liability relating to equal pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month.
"The council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so."
The spokesperson said: "The council will tighten the spend controls already in place and put them in the hands of the section 151 officer to ensure there is complete grip.
"The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately.
"The council's senior officers and members are committed to dealing with the financial situation and when more information is available it will be shared."
Croydon Council in south London issued a Section 114 notice in November last year because of a £130m black hole in its budget.
Thurrock Council in Essex, east of London, also declared itself in financial distress in December last year.
SIGOMA, a grouping of 47 urban councils within the LGA, last week warned that one in ten of its members were considered making the statutory admission that they have no prospect of balancing their books.
Nearly 20% said they could do the same in the next year.
High inflation, rising energy costs and wage demands have exacerbated government funding cuts to essential services, it said.
Councillors have to meet within 21 days of a Section 114 notice being issued and produce a budget that makes necessary cuts to reduce spending.
Additional reporting AFP
