Inflation is forcing councils to make extra cuts in their budgets set earlier this year, according to new research.
A survey by the Special Interest Group of Municipal Authorities found more than half doubted they would be able to cover their costs in the current financial year.
It found 60% would be forced to take cost-cutting measures to reduce capital budgets for key regeneration and infrastructure projects.
Most councils said this created a risk that standards will fall in services including adult and children’s social care.
The group is calling on the Government to provide targeted funding to ensure that vital projects can go ahead as originally planned.
Its chairman Sir Stephen Houghton, who is Labour leader of Sheffield city council, said single-year settlements created unnecessary uncertainty.
He said: 'Inflationary pressures are significantly impacting construction costs and many of our members are having to scale back projects or cancel them outright due to funding uncertainty.
'Instead of spreading relatively small pots of funding across the whole country, as has been the case with levelling up funding, the Government needs to provide targeted funding to ensure these vital projects can go ahead as originally planned, as well as deliver wider reforms to the process, including reducing the number of bidding contests and focusing on supporting the areas that are most in need of regeneration funding over the long term.'
