Alistair Darling on Tuesday denounced as “utter madness” a plan by David Cameron, Conservative party leader, to cut public spending by £5bn next year to fund tax breaks for savers.

The chancellor claimed the proposal would be “extremely damaging to the economy”, reducing demand when most countries around the world – including the US and Germany – were boosting spending. Mr Darling attacked the Tory leader’s approach to the recession as “all over the place”, arguing that he had taken inconsistent positions on issues ranging from the nationalisation of Northern Rock to the recapitalisation of the banks.