The shortfall from the sale of 4g broadband capacity means chancellor George Osborne will be under increasing pressure to make greater cuts.
A short term consequence of George Osborne’s failure to secure the expected money from the sale of 4G mobile spectrum – the sale raised £2.34 billion rather than the predicted £3.5 billion – will probably be greater government borrowing.
The treasury is now facing a £1.2 billion shortfall as a consequence of failing to secure the expected amount.
The prediction that the 4G sale would raise £3.5 billion was included in Osborne’s last Autumn statement to show that borrowing would not need to rise this financial year.
The fact that profit on the sale fell short by almost a third implies borrowing will now rise to make up for that shortfall.
Earlier this month, The Institute of Fiscal Studies (IFS) said the coalition had borrowed £64billion more than it had originally predicted in 2010. It also warned that whoever was in power after the 2015 election would need to find around £50billion to sustain public finances.
In this context, the extra billion that the chancellor will now need to find is relatively small fry.
It adds, however, to the growing sense that finances are spiraling dangerously out of control on Osborne’s watch.
Politically this is good for opposition parties, but it is worth remembering that within the coalition Osborne is under more pressure from the right than from the left.
As Left Foot Forward reported last week, the failure of austerity to bring with it a return to prosperity has had the perverse effect of emboldening the tory right, who are now putting pressure on the chancellor to make further swingeing cuts.
When the latest borrowing figures come out tomorrow it’s worth keeping an eye out for more short-termist, 4G-like attempts to distract from the trend towards increased borrowing.
Also keep an eye on Osborne’s critics on the tory right, who are salivating at the prospect of further cuts and are starting to get a hearing in the Conservative Party, ironically, due to the failure of a version of their own brand of economics.
31 Responses to “Osborne’s missing 4G billion increases pressure for cuts”
HerbertProperSenior
I’m hoping that John O’Farrell will be returned as M.P. in the forthcoming Eastleigh by election.
LB
failure to secure the expected money from the sale of 4G mobile spectrum
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It’s not a failure. It’s a win for the consumer, because it means lower prices for mobile usage.
LB
he fact that profit on the sale fell short by almost a third implies borrowing will now rise to make up for that shortfall.
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Or the government gets its spending under control. 150 bn of Keynsian stimulus, and bugger all to show for it.
Kevin Leonard
The man is nothing but an incompetent ar$e who does not have a clue about finance other than what he is being told by his own financial advisers who pocket a percentage from hiding his personal fortune on some far away shore.
He is heading towards the honour of being the most hated imbecile alongside many contenders in this coalition of ba$tard$.
The pity of it is that come the next chance for the people to pretend to have a democratic choice in who runs this country it will still be “ALL LABOURS FAULT” according to the coalition and backed by the BBC and the compliant press a great number will follow like sheep and produce yet another stagnant Quasi dictatorship in Westminster with all following the whip system.
WE NEED A REVOLUTION OF THE PLEBS rid ourselves of this controlling set of arrogant ba$tards on all sides.
robertcp
More cuts will slow down the economy even more and lead to more borrowing. Has the Tory right learnt anything since 2010?