New comparative research will examine how local authorities in the United Kingdom, Germany and Japan finance investment, manage fiscal pressures and balance local autonomy with long-term financial sustainability.
The Japan Local Government Centre (JLGC) is pleased to announce a new research partnership with the Japan Finance Organization for Municipalities (JFM), a joint funding institution established by Japanese local governments to support municipal borrowing and long-term investment.
The partnership will support a programme of comparative research examining local government finance systems in the United Kingdom and Germany. Through the project, JLGC and JFM will explore how local authorities fund infrastructure and public services, how borrowing and investment are financed and how different countries respond when local authorities face financial difficulties. The research will be conducted with the support of the Chartered Institute of Public Finance and Accountancy (CIPFA), the Local Government Association (LGA) and the Institute for Fiscal Studies (IFS).
Director General of JLGC London, Akira Matsutani said “Ensuring that local authorities have stable and sustainable sources of revenue is fundamental to the effective functioning and long-term development of local autonomy.
At the same time, approaches to local government finance continue to evolve in response to changes in financial markets, public policy, and technological innovation.
It is therefore important to share knowledge, experience, and examples of good practice from different countries, enabling local governments to learn from one another and strengthen their financial systems.
Such international exchange plays an important role in supporting the continued development of local autonomy.”
The research will examine the different funding mechanisms available to local authorities in each country. In the United Kingdom, this includes borrowing from central government sources, commercial banks and capital markets, as well as collective financing arrangements. The study will investigate how local authorities use these different sources of finance and will examine a number of case studies to understand how borrowing practices vary according to local circumstances and investment needs.
A second strand of the research will focus on fiscal distress and recovery. Recent years have seen several English local authorities experience significant financial challenges, prompting renewed debate about the resilience of local government finance systems. The project will examine the institutional frameworks that come into effect when local authorities face difficulties in meeting their financial obligations, including the role of central government intervention, oversight arrangements and recovery processes. By comparing experiences across different countries, the research aims to identify lessons about how financial sustainability can be strengthened while preserving local democracy.
The partnership reflects a growing international interest in the relationship between decentralisation, local autonomy and financial stability. Comparative research between Japan and Europe offers particularly valuable insights because the countries involved have adopted different institutional arrangements while addressing many of the same underlying challenges.
For JLGC, the partnership represents an opportunity to strengthen knowledge exchange between Japan and Europe on one of the most important issues facing local government. While national systems differ in their history, legal frameworks and political context, local authorities across all countries are confronting common challenges including ageing infrastructure, demographic change, rising service demands and pressure on public finances. By bringing together academic and institutional expertise from the United Kingdom and Japan, the project aims to contribute to a better understanding of how local government finance systems can support both local autonomy and long-term fiscal sustainability.
