"Dear Santa," begins the Chancellor, tucked up in 11 Downing Street with a sherry, writing his Christmas list: "I've had my hand down the back of every sofa in the Treasury, I've walloped the working poor and I've even hit the pensions of my rich pals. But the economy has gone for a Burton and there's no growth. What I could really do with is rustling up few extra billion quid from somewhere."
He may not have been a particularly good boy this year, but soon George Osborne's wish may be granted. A belated windfall is on the way for the public finances, from the auction of 4G mobile spectrum due to start in January. Consumers demand super-fast broadband on their jazzy new iPhones and tablets, and the mobile companies are under pressure to deliver it or else lose valuable custom.
The Chancellor – or more precisely the Office for Budget Responsibility – took a modest kicking in the Autumn Statement for pencilling in £3.5bn in proceeds from this auction in the public accounts. This allowed Mr Osborne to claim the deficit was falling this year, giving Ed Balls a particularly bad day at the office. Jeremy Paxman snorted that counting the estimated takings now was "like Billy Bunter's postal order" – perennially in the post. We also had shock-horror headlines over the weekend about a black hole in the public accounts, after it emerged that the regulator, Ofcom, has set a reserve price of £1.3bn. This potentially leaves the Treasury more than £2bn short if the auction flops.
But just look at the latest couple of auctions of 4G spectrum. Both have surpassed expectations. Ireland's cash-strapped government raised €855m (£527m), while the Dutch government has managed to raise €3.8bn. In fact the shares of its one of its biggest telecoms companies, KPN, crashed yesterday because it warned that it might have to cut its dividends this year because it paid so much. Vodafone's shares suffered as well.
As one telecoms analyst told me, you just have to crunch some very simple numbers. There are about 4.5 million people in Ireland, so telecoms firms have paid around €190 a head. In the Netherlands, a country of 17 million, they have paid €220 a head. In the UK, with a population of 62 million, there is surely a premium to be paid. If companies paid £200 a head for the spectrum, that would produce takings of £12.5bn – not the £22bn seen in the 3G auction at the height of the tech boom in 2000, but still more than three times larger than the OBR's estimates.
There are a few caveats here: GDP per head in the Netherlands is a third or so higher than ours, which will deflate how much operators will bid per customer over here. The Dutch also had a new entrant, pushing up prices, which is not expected in the UK. We also already have a 4G service in the UK – so one operator, EE, will likely bid less. But then bear in mind that with the astonishing growth of smartphones and tablet computers in recent years, the big telecoms firms are desperate for this stuff, and warning of a "capacity crunch". The Ministry of Defence is even selling off half of its own military spectrum, looking to cash in to the tune of about £1bn.
The US digital research company ComScore says 62.3 per cent of all British mobile users owned a smartphone as of October, up a whopping 14 percentage points on a year earlier. The market is so hot across Europe that even in Spain – yes, that's bailout candidate, 25 per cent unemployment Spain – smartphone use has jumped to 63.2 per cent, rising by even more than the UK. This isn't about the early adopters anymore, it's mainstream: I'm a technological Luddite who joined the smartphone revolution only three months ago, and I've done half my Christmas shopping on the train home this year. All reasons to think that this auction has more chance of punching the lights out than flopping.
And with one bound, the Chancellor was free …
It's bad if even property agents are worried
Don't be deceived by the insurer Amlin's move to lease a chunk of British Land's Cheesegrater tower in the City yesterday. Banks are shedding staff by the thousand, or pulling up camp and moving to Canary Wharf, or "nearshoring" out of the capital. Outside the buoyant insurance industry – the target market for both the Cheesegrater and its Walkie-Talkie rival – things are tough for the property pinstripes.
The agent across the table has had a good year by the standards of a bleak market. He's on the occupational side, finding office space for City tenants, and he's got a few reasonable deals under his belt. But he's hardly in the mood to cheer. When financial services sneeze, the property industry catches a cold. Outside the insurance hotspot, there are virtually brand new City office buildings, such as Cannon Place and the Heron Tower, which have been struggling for tenants. The Shard isn't doing that well either, although its Qatari backers have got deep enough pockets to sit there and wait for the market to turn.
They could be waiting a long time. Rents in the City are averaging £52 a square foot, which in cash terms is actually roughly the same as 20 years ago. In real terms, he says, it's a 75 per cent cut. "These finance directors are hard, remorseless. They are constantly trying to screw you down."
The theory is that a host of lease expiries in the City and a lack of supply will push up rents in the years ahead. On the ground, the mood is less sure. Agents are almost genetically primed to be bullish, and this one is worried about next year. It could be a tough one in the Square Mile, for banks and property alike.