Disappointing 4G auction income is bad news for Osborne’s deficit plans

Oh dear. George Osborne’s claim in December’s Autumn Statement that ‘the deficit is coming down this year, and every year of this Parliament’ was already looking hubristic, even before today’s news that the 4G mobile spectrum auction raised just £2.3 billion, rather than the £3.5 billion that the Office for Budget Responsibility had forecast. As Fraser blogged in November, there were hopes that Britain would — like Ireland — raise even more than expected from the auction.

At the Autumn Statement, the OBR predicted that borrowing (once you strip out the effects of various one-off accounting changes, such as the transfer of Royal Mail pensions) would fall ever-so-slightly this year, from £121.4 billion in 2011-12 to £120.3 billion in 2012-13. The 2011-12 deficit has since been revised up to £121.6 billion, but that forecast for this year included the assumption that the spectrum auction would raise £3.5 billion. Since it came in £1.2