Birmingham City Council is to axe up to 2,000 jobs and cut spending by £75 million over the next year.

There are also plans for an unprecedented pay freeze for 25,000 council workers.

For the first time ever staff will not receive a wage rise in 2010, if national negotiators for all Britain’s councils can force the pay clamp past trade unions.

Proposals by Birmingham’s ruling Conservative-Liberal Democrat coalition amount to the toughest city budget for years. And there are warnings that things are likely to get worse rather than better.

Savage government spending cuts expected after the General Election could see Birmingham having to find a further £115 million in cuts by 2019, according to figures produced by thinktank the Institute for Fiscal Studies.

But in an effort to give some relief to hard-pressed householders, it’s been decided to increase council tax by only 1.9 per cent for the fifth year running.

The below-inflation increase, thought to be the lowest in the Midlands, works out to about £2 a week for the average bill.

This year’s £75 million cuts package, dubbed "efficiency savings" by the council, will be achieved largely through shedding between 1,500 and 2,000 jobs.

The figure is on top of 800 job losses this year and is equivalent to about six per cent of the total workforce. Further job cuts are certain over the next five or six years as public spending cuts begin to bite.

Most of the money saved will be ploughed back to meet demand for social services and to cover reduced income from car parking and leisure services.

City council chief executive Stephen Hughes said he did not want to hide anything about the scale of the local government spending squeeze over the next few years.

Mr Hughes said: “The scale of cuts is likely to be of a magnitude that no one has seen. My life in local government goes back to 1979 and there has never been anything as bad as this.”

But opposition Labour group leader Sir Albert Bore accused Mr Hughes of exaggeration.

Sir Albert (Lab Ladywood) said the predicted squeeze on public spending was “no worse than cuts in the Thatcher years” and he believed the council should seek more innovative ways of making ends meet.

He added: “These are not efficiency savings being planned, they are appalling cuts to services. This council administration is going to take us down the road where services for vulnerable people will be very badly affected.”

West Midlands regional Unison official Tony Rabiotti accused the council of panicking. Mr Rabiotti said: “They are just rushing into this.

"There is absolutely no need to make 2,000 people redundant, given the huge number of agency workers employed by the council. The trade unions will do everything we can to fight these outrageous proposals.”

Many of the jobs at risk are in adult social services, although front line social workers are being protected.

Jobs will also go in libraries, sports centres, parks, museums, neighbourhood offices and the housing and planning departments.

Continuing to close the city’s remaining council-run old people’s homes and day centres will save £6 million, and a management shake-up in social services should produce £5 million.

Hall Green Labour MP Steve McCabe branded the budget a “disgrace”.

Mr McCabe added: “Employees and residents will pay the price for a badly managed, poorly run authority. The council has recklessly got itself into debt and now expects the lowest paid workers to pick up the tab.”

Tory council leader Mike Whitby said: “Despite the extremely challenging economic climate, we have been able to deliver a fair and reasonable budget that underlines our commitment to easing the tax burden on all households, and in particular supports those who are on fixed-incomes or collecting a pension.

“In real terms, people will once again actually be required to pay less in the forthcoming year as we have successfully kept our proposed increase at just 1.9 per cent, which is comfortably below the rate of inflation. To deliver this small increase five years in a row is a great achievement, and to do it in the current climate as well is remarkable.

“Birmingham is demonstrating how frontline services and significant regeneration schemes can be delivered without punishing taxpayers. I am proud that we are able to do this.”

Mr Hughes said everything possible would be done to avoid compulsory redundancies, but he could not rule out the likelihood of sackings.

He added: “We have only had a handful of compulsory redundancies so far. I am not saying we will be able to achieve that going forward, but it is our objective. We don’t want to go around making people compulsorily redundant.

“There are a range of proposals. We are looking at voluntary redundancy, early retirement and reduced working hours. There are a whole host of things that can be done to avoid compulsory redundancies.”

He stressed that the council was looking wherever possible to avoid direct cuts by increasing income and delivering services more efficiently.

Politicians running the council have to find £67 million this year to plug a black hole in city finances. Most of the additional money is needed to shore up adults and children’s social services.

But the loss to Birmingham of the prestigious Motor Show is causing a major financial headache for the council-owned National Exhibition Centre.

Expected profits from the NEC, which help to pay for council services, are expected to be £33 million below target.