The governor of Michigan, Rick Snyder, declared a fiscal emergency in Detroit yesterday, clearing the way for the appointment of an outside manager with broad powers to oversee the debt-ridden city.

The emergency manager could recommend a bankruptcy filing if he or she found the city’s fiscal problems were insurmountable. If Detroit took such a step it would be the largest municipal bankruptcy in US history.

Mr Snyder, Michigan’s Republican governor, declared the emergency after a state panel recommended the move.

Calling it a “sad day”, he told a city forum: “It’s time to say we should stop going downhill.”

Members of the city council, dominated by Democrats, did not attend the forum. They met yesterday morning to discuss whether to take legal action to challenge Mr Snyder’s appointment of an emergency manager. – Copyright The Financial Times Limited 2013