The curious case of the Chancellor, the 4G sale and government borrowing

December 5, 2012 2:10 pm

George Osborne seemed very pleased with himself today, as he suggested that borrowing is forecast to fall.

And yet that’s not the full picture.

The only reason borrowing is forecast to fall this year is because the government has added the 4G mobile spectrum auction to this year’s figures – even though government delays mean the auction hasn’t happened yet. Without the £3.5bn receipts penciled in from the 4G sale, borrowing would be £2bn higher this year than last year.

Previous OBR estimates had suggested that the 4G spectrum could be worth between £1.5 billion and £6.7 billion. It’s unclear at this stage where the £3.5 billion figure came from, as the spectrum hasn’t been sold yet… George Eaton calls it “an accounting trick worthy of Enron” – and he’s right.

Has Osborne factored in money not yet received from a 4G spectrum auction which hasn’t taken place yet, in an attempt to cover the fact that he was set to borrow more this year than last year? It certainly looks like it…

  • rekrab

    A shocking lack of detail from Osborne as he piles more pressure and austerity on those who have the least.

    In June 2010 Cameron and Osborne both said they had saved Britain from a fate worse than Greece? while 18 months on we have the longest ever double dip recession and we’re spending more than ever before propping up more austerity.If you were a betting person, you wouldn’t trust Osborne with a penny

  • Serbitar

    I think Mystic Meg would probably make more accurate economic forecasts via her crystal ball than the OBR’s statisticians. It is difficult to identify an organisation or institution that has been so wrong, about so much, for such a long time… other than the government itself of course… which goes without saying.

    • Quiet_Sceptic

      ‘the government’ or do you mean simply ‘government’.

      I don’t think any of the UK political parties have shown any competence in economic prediction.

    • Quiet_Sceptic

      ‘the government’ or do you mean simply ‘government’.

      I don’t think any of the UK political parties have shown any competence in economic prediction.

      • Serbitar

        True that.

      • Serbitar

        True that.

      • Serbitar

        True that.

    • JoeDM

      No economic forcast is worth the paper it is printed on.

      Trying to manage an economy through Keynesian-style demand management is like trying to drive a car when you can only see your rear view mirror.

      • TomFairfax

        Strangely enough something similar was said about Geofrey Howe’s monetarist stint as Chancellor in the first Thatcher government at the time. Something about driving a car by just looking at the instruments and not out of the window.

  • JoeDM

    I was very surprised by the dreadful performance by Ed Balls. He seemed to totally out of his depth and unprepared.

    • aracataca

      Oh what and Osborne was good?

    • aracataca

      Oh what and Osborne was good?

    • aracataca

      Oh what and Osborne was good?

  • Quiet_Sceptic

    It’s hard to get excited about.

    Compared to things like PFI and pension liabilities which are off-balance sheet it’s a drop in the ocean.

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