George Osborne has accused Gordon Brown of planning a "spending splurge" that will saddle two generations with debt.
The shadow chancellor told the BBC attempts to "spend your way out of a recession" would only lead to "huge debt" and higher taxes in the future.
Instead the Tories would "target" tax help such as freezing council tax and payroll tax for small firms.
But he was attacked by Labour and Lib Dem opponents for being "confused" and "out of his depth" in his analysis.
Instead of boosting spending to speed-up the economy, Mr Osborne said the Conservatives would "put money direct into people's pockets" by freezing council and business taxes.
Ahead of a speech at the London School of Economics - his first since the row over his meetings with Russian billionaire Oleg Deripaska - Mr Osborne told BBC Radio 4's Today programme: "You can't spend your way out of recession.
George Osborne is clearly way out of his depth
"Let the Bank of England do its job, by cutting interest rates, and offer targeted help by freezing the council tax, but also keeping people in work by, for example, cutting payroll taxes for small businesses.
"And don't end up in a position where, because you have spent beyond control, borrowed without limit, you have saddled this economy with so much debt, that we spend a decade trying to get out from under the mountain of debt the government has left us with."
Liberal Democrat Treasury spokesman Vince Cable has been calling for a "drastic" cut in interest rates but Chancellor Alistair Darling has said it is a decision for the independent Bank of England.
Mr Osborne said in his speech that excessive borrowing would make it more difficult for the Bank of England to achieve "a sustained reduction in interest rates".
He said it would mean spiralling debt interest payments and tax rises for years to come and argue that a "spending splurge ... is the road to economic ruin".
But Treasury Minister Angela Eagle accused Mr Osborne of being "all over the place and confused" in his analysis.
She told the BBC News Channel: "George Osborne didn't mention the international situation once in his speech. It just shows that he's all over the place, chasing quick headlines, with no coherent policy."
Gordon Brown addresses Scottish business leaders
And Vince Cable said Mr Osborne had shown "poor judgement" throughout the economic downturn and accused him having nothing to offer families get through the tough times.
"George Osborne is clearly way out of his depth," said Mr Cable.
"His arguments on how to get us out of recession are entirely incoherent. He argues against continuing government spending on the basis that it will push up borrowing, then announces un-funded tax cuts which would do just that."
Asked about the government's spending plans in Edinburgh, Mr Brown told local business leaders on Friday the government had cut national debt as a proportion of national income over the past decade.
He added: "We have low national debt in this country.
"In my view the only thing that you can do in circumstances where the economic activity that you need is not taking place in the market place at the level you want is to temporarily to make sure that you do something to increase that level of economic activity."
But he said you also needed to "make the right judgements" about where to spend the money in order to "make a difference" and said the government's recapitalisation of banks had made a difference and he hoped would eventually yield a return to the government.
In the same speech he said "the energy problem" with oil prices had to be solved adding: "It is a tragedy that the world is prey to one volatile commodity, that can disrupt businesses, disrupt people's lives, by a trebling of prices, over a very short period of time, and interestingly enough, an industry run by a cartel - not run in a free market way at all.
"And we've got to solve this energy problem because it's part of our climate change problems, but it's also part of this question about how affordable energy is for businesses and for individuals in the future."
Meanwhile, a YouGov poll for the Daily Telegraph suggests the Conservatives' lead over Labour has fallen since a similar poll last month, from 24 points to nine, putting the Tories on 42%, Labour on 33% and the Lib Dems on 15%.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.