Alistair Darling and George Osborne traded blows over how to tackle the deficit in the first ever "Chancellors debate".
Mr Darling used his opening statement to attack Tory plans for immediate spending cuts, warning that "premature" reductions risked "tipping us back into recession".
But his Conservative shadow insisted that people knew from their own experience that the "sooner you deal with a debt problem, the better".
"We need to cut wasteful Government spending instead of increasing National Insurance taxes on hardworking people," he said.
Liberal Democrat Treasury spokesman Vince Cable said there had to be a "new kind of economy" in Britain, which relied less heavily on "a few prima donnas" speculating on financial markets.
Mr Cable said his long experience in the private sector made him the best candidate for the job of chancellor.
Mr Osborne said he would take difficult decisions which were "rooted in values".
He said: "My values are around responsibility, they are about supporting people who want to work hard, who want to save hard and always understanding it is not my money or Alistair's money, it is the public's money you are dealing with, and remembering that every single day you do the job."