The British government will borrow £2.2 billion sterling (€3.5 billion) less this year because of the £22.5 billion mobile phone licence auction windfall, but it has deferred the decision on what to do with £10.7 billion more of the cash.

The Treasury also said yesterday it was planning to buy £5.9 billion of foreign exchange to pay back foreign currency-denominated debt, but insisted this did not amount to intervention against sterling.