By John Stepek, exclusive to MSN Money, 22/04/2009 00:00

The Budget – what he said, and what he meant

Like all good politicians, chancellor Alistair Darling speaks with a forked tongue. There's what he says and then there's what he means. Just as an estate agent might describe a bedsit as an "open-plan bijou living space with en-suite washing and cooking facilities", so Darling's words often disguise a more prosaic reality.

So here are six of the key themes from his Budget speech and what he really meant by them.

MSN Money's full coverage of Budget 2009

What he said: This is "a global recession"
What he meant: "None of this is our fault"

The first thing to note about the Budget speech is that Darling lost no opportunity to point out that this is "a global recession," where "the impact is being felt in every continent, country and community".

In particular, he blamed the September 2008 collapse of US bank Lehman Brothers for bringing "the international financial system to its knees." Trouble is, while most countries are indeed suffering, there's plenty the government could have done.

It could have saved during the good times. After all, Gordon Brown often boasted of how well the economy was doing compared to its peers in past Budgets. But instead we continued to spend like mad. And it seems that this isn't going to change, as the chancellor's next big theme shows...

What he said: "Some have argued that we should cut public services immediately, rather than invest and grow our way out of the recession. That would be the wrong thing to do."
What he meant: "You must be joking if you think I'm going to cut public spending right before an election and alienate the last group of people who'll still vote for us."

Given the state of the public finances, you might expect that some reduction, or at least a freeze, in spending on the public sector might be in order. Instead, spending on public services will continue to grow at 0.7% a year from 2011/12, helped along by "efficiency savings" in back-office jobs and IT.

But "efficiency savings", rather than explicit, directed cuts, are very easy to fiddle. And it does rather beg the question: if these efficiency savings were here to be had in the first place, then why weren't they done during the good times? And who's going to pay for it all? Which takes us neatly to...

What did you make of the Budget?

What he said: "I believe that it is fair that those who have gained the most should contribute more."
What he meant: "We're going to tax the rich until their pips squeak." (to misquote Denis Healey)

The introduction of a new top tax rate of 50% on people earning more than £150,000 a year looks like a good way to politically punish the same bankers who are getting lots of taxpayer money in bail-outs. But in fact, it won't actually raise that much money.

Even the £2.5 billion or so that the government expects to raise from this and other 'bash-the-rich' policies, is just a drop in the ocean compared to the scale of borrowing we face. And that's assuming that the tax increases even manage to raise that amount of money.

What's more likely to happen is that people on the margins will have to cough up the extra tax, while the super-rich will find new ways to avoid it. So where else is the money going to come from? Funny you should mention that...

What he said: "You can grow your way out of recession. You cannot cut your way out."
What he meant: "Please keep buying gilts"

The government needs to borrow a lot of money to fill the gap between its spending plans and its actual tax revenues. So the chancellor's main task in this Budget, you might have argued, was to persuade international investors that Britain actually intends to pay back the money it needs to borrow at some point.

But with no plans for spending cuts, he seems instead to be hoping for a major rebound by 2011, suggesting that the economy will grow by 3.5%. However, this seems hugely optimistic, particularly as Britain's key industries have taken a particular hammering in the financial crisis. So what will lead us out of this recession?

What he said: Growth will "increasingly come from... the industries of the future, such as low-carbon, advanced manufacturing and communications."
What he meant: "Our tax cash cows of high oil prices, soaring house prices and a thriving financial sector are all dead - what on earth will we do now?"

The chancellor seemed to be attempting to reinvent Britain as an export economy, almost suggesting that it was the collapse of world trade that has done for us, rather than a foolish over-reliance on consumer borrowing and spending.

He also continued to emphasise the global economy: "growth will also be driven by opportunities to export as the global economy doubles in size in the next two decades." But the fact that he has to look so far ahead to find a potential positive statistic to throw into his Budget isn't encouraging. And given his forecasting record, it's almost meaningless.

What he said: "The unexpected severity of the recession has led the IMF to downgrade its own forecasts for the world economy three times since October"
What he meant: "I might have a terrible forecasting record, but so does everyone else"

It's true that other countries might not have seen this coming. But Darling's forecasts really take the biscuit. In last year's Budget he suggested that British GDP would grow by 2.5% this year. He now reckons it will shrink by 3.5%. Net borrowing was expected to come in at £38 billion. Now it's up to £175 billion. Unfortunately, this suggests that he might be revising his other forecasts down come this time next year.

And with our debt levels already sky high and no credible plans for reducing them investors may well be reluctant to continue lending to the government. If we want to avoid a trip to the IMF, that'll mean even more tax increases under any future government.

One thing's for sure, the next Budget will have to come with an even bigger dose of grim reality than this one.