Birmingham City Council finance chiefs have calculated the authority's budget gap will increase by a further £20m to £625m, following last December's local government finance settlement.
Sir Albert Bore, leader of Birmingham, which is the UK's largest local authority, last week told a council scrutiny committee a consultation on major cuts and decommissioning will start this summer.
Speaking in October before the finance settlement, the council leader announced Birmingham would be required to make £605m savings from 2011 to 2017.
However, Sir Albert said: 'There are increased problems following the local government settlement.
'For this year the situation is that we are £0.3m better off than forecast, the problem is that the forecast for the 2014/15 budget is down £24.9m,' Sir Albert said.
The top-slicing of early intervention grant cash is set to cost Birmingham £13m. and the authority's children's services department has failed to deliver promised £24m savings through an overhaul of children's care, Sir Albert conceded.
