Councils in Wales are facing a financial black hole of almost £400m, new research has shown, with warnings that unless funding is raised further service cuts and council tax hikes are inevitable.

The BBC’s Shared Data Unit surveyed councils on their budgets, and data shows that of Wales’ 22 councils, 17 said they needed to save £182m this year, 20 predicted a combined two-year shortfall of £394.8m, and 10, including Ceredigion, had raised council tax by at least five per cent.

The £16.5m planned savings in Powys this year works out at £123.50 per person in the county - the biggest saving per head.

James Gibson-Watt, the Liberal Democrat leader of Powys Council, said: “There’s only so long that councils can go on shaving costs off individual services.

“There’s a phrase that’s used ‘salami slicing’, which is a very accurate way of describing what local authorities have had to do over the years, looking for savings here, there and everywhere.

“Eventually, you get to the point where there is no more to slice. You then have to start looking at a fundamental change to the way you do things, and that’s what we’re having to do.”

The figures show that Gwynedd Council is expecting planned savings of £5.2m this year, but did not give a figure for its predicted two-year deficit.

Ceredigion council also did not respond with figures, but its cabinet has warned it faces ‘difficult decisions’ to balance the books despite a 7.3 per cent council tax hike in April.

Earlier this year, Ceredigion warned of a deficit approaching £10m, with warnings that cuts would have to be made.

Powys is predicting a £14.7m deficit by 2026, the data shows.

The Welsh Local Government Association said the current situation is “not sustainable”.

“We are also worried about the implications for next year and in the medium-term,” a WLGA spokesperson said.

“Cuts will have an impact on services and jobs.

“We estimate a budget gap could open up of between £330m to £480m next year which will have a serious impact on local services, and we are currently surveying councils to get more precise estimates and assess the risks.”

The Welsh Government blamed inflation and “economic mismanagement” by successive UK governments over 13 years, leading to “the most difficult financial situation since devolution”.

“As part of our efforts to protect public services we are providing increased funding for local authorities in this financial year, with a 7.9 per cent increase across Wales on a like-for-like basis,” a spokesperson said.

“This follows a 9.4 per cent increase in 2022-23.

“But we recognise that local authorities are facing difficult decisions and we continue to work closely with councils to meet the shared challenges we face.”

Unison said that “cash-strapped councils are having to resort to ever more desperate measures after years of austerity just to keep services going.”

“Council funding is a devolved issue, but the Welsh government remains heavily dependent on funding from Westminster.

“The Welsh government has done its best to limit financial challenges faced by councils, particularly during the pandemic, but additional money is needed in the longer term.”