Blue Circle is a famous cement company, so to be blue circling is to be laying the foundations for something. So for instance if you start coughing very loudly and obviously near your boss, you might be blue circling so when you call in sick the next day it sounds more believable.
"Cough! Cough!" - "Hey Bob, stop blue circling you muppet, we all know you just want to the day off tomorrow because it's Friday."