George Osborne has been left with egg on his face as a result of the 4G auction. What looked like one heck of a wheeze for the chancellor at the time of his autumn statement does not look nearly so clever now that the sell-off has garnered much less than expected. A short-term political stunt designed to wrong-foot Ed Balls, his Labour shadow, has backfired.

Here's what happened. In 2000 when the Labour government sold off the 3G licences, the dotcom boom was in full swing and the mobile phone companies assumed that they would make a mint from owning a chunk of the airwaves. They paid a whopping £22.5bn for the licences, which the then chancellor Gordon Brown used to pay off a slice of the national debt.

There have been two big developments since. The first is the changed economic climate. Britain's economy has been flat-lining for the past two years and in the broader global economy any recovery from the recession of 2008-09 has been dogged by setbacks. The second factor is that mobile companies quickly realised they were not the real beneficiaries of expanding the bandwidth: instead firms such as Google and Apple were the real winners.

Nobody in Whitehall seriously expected the mobile companies to pay £22.5bn a second time, but it was still hoped that the auction would raise £3.5bn. This was a tidy enough sum, but not actually in the bag. By pretending it was, however, Osborne was able to say in his autumn statement that net public borrowing would fall in this financial year.

After a poor run of financial data this had looked highly improbable, but by banking the £3.5bn in advance Osborne could say deficit reduction was still on track. Without the proceeds from 4G, he could not have made this claim – a fact he omitted to mention in his speech.

Balls was, indeed, wrong-footed. He was completely thrown by Osborne's sleight of hand, much to the merriment of coalition MPs. But the fact that the auction raised only £2.3bn now makes it touch and go whether the borrowing forecasts made in the autumn statement will be met, even using the chancellor's questionable accounting methods.

There is a silver lining to this cloud. The roll-out of mobile broadband after the sale of the 3G licences was slower than it ought to have been because the mobile companies had paid over the odds and were therefore short of funds to invest. That should not be the case this time: the benefits of expanding bandwidth should be felt much more quickly, with beneficial effects to the economy.

Osborne could still be spared the embarrassment of having to admit that borrowing will, after all, go up this year, but only if Thursday's deficit data shows that tax receipts in January – normally a bumper month for the exchequer due to the payment of self-assessed income tax – were surprisingly strong. These will be the last set of public finance figures before next month's budget and, as things stand, the chancellor will have to again use smoke and mirrors in order to pretend things are better than they are. He is left diminished by this affair.