David Cameron moved to further sharpen the divide between the Government and the Conservatives over how to best combat the recession, setting himself sharply at odds with Gordon Brown’s strategy.

The Conservative leader seized the opportunity of a high-profile appearance at the World Economic Forum in Davos to attack the Prime Minister’s plans to fight the slump in the economy, and lambast Mr Brown for what he said were failures of leadership.

In an attack that came on the eve of Mr Brown himself arriving in Davos, where he is set to try to secure further support for his approach to the crisis, Mr Cameron said there was a pressing need for ministers in Britain to show “a frankness, and a candour and an honesty, about how we got here, about how we are going to get out of it”.

“We made mistakes in the UK,” he added. He pointed to what he claimed were serious failures by financial regulators, banks, and politicians, including the opposition parties, as well as the public itself which had borrowed to excess.

Turning his fire on the Prime Minister again, he went on: “It would be wonderful to have more from leaders in the following short sentence: ‘I got it wrong’ .”

Mr Cameron renewed his attack on Mr Brown’s support for “fiscal stimulus” through tax cuts and higher government spending as a way of combating economic slump and insisted that Britain could not afford this.

“I am a monetary activist and a fiscal conservative,” he said. “In the UK, my view is that borrowing 8 per cent of GDP is too much."

He said that the electorate understood borrowing on this vast scale would mean higher taxes in future, so that stimulus plans were counterproductive. “It undermines confidence because people are not mugs. It might be the easy thing to do, but it is the wrong thing to do.”

In another swipe at Mr Brown, the Tory leader suggested that the Prime Minister was engaged in “frenetic hyperactivity” and trying to dominate all initiative to combat recession when teamwork was required.

Mr Cameron told a Davos audience that it was “very important we use the crisis to try to address the imbalances in our own economy and the global economy” , otherwise rescue measure would simply sow the seeds of future crises’ by inflating new bubbles in asset markets.

In the UK, he said it was vital to solve the problem of too much growth coming from a handful of critical sectors, leaving Britain dependent on the housing market, the financial industries and a swollen public sector.

The Tory leader said that an incoming Conservative Government would have to move quickly to “seize the moment” of pushing through crucial reforms rapidly after a return to power. A new government needed to exploit “the opportunity that you get after being elected” of having a reserve of political capital, he suggested.

But he said that should be become Prime Minister he would inherit from Gordon Brown a severe economic challenge of restoring government finances now mired deep in the red to a more sustainable condition.

With the government’s budget deficit already at 8 per cent of GDP and probably rising, the challenge of getting the public finances on a sustainable footing was daunting, he said: “Doing this when the economy is fragile is going to be enormously difficult.

“The challenge of leadership in a crisis if we win the next election is going to be huge,” he admitted. “What is required is a dose of realism, combined with a very big dose of hope.”

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