David Cameron said today that he sometimes felt like shaking Gordon Brown over his handling of the economy.

The Conservative leader said that he was frustrated that the Prime Minister had wasted £12.5 billion on cutting VAT, when what really needed action was the banks' refusal to lend more money to keep businesses working.

“I feel like shaking the Prime Minister sometimes and saying ’Look, what don’t you get - it’s a credit crunch, that’s what needs to be addressed'," Mr Cameron told BBC Radio 4's Today programme

“’Stop wasting our money with cutting VAT, spending £12.5 billion of taxpayers’ money that we’re going to have to find and pay back one day on something that everyone now accepts has been a waste of time. Get with the programme’ is what we need to (say)’.”

The VAT cut was a complete joke when faced with massive sales in the shops over Christmas, he told the BBC. “The Government might as well have gone out and burned the money; it was a criminal waste of money.”

Mr Cameron accused Mr Brown of plunging Britian into terrifying levels of debt, with £118 billion of borrowing next year. “If you’re in a debt crisis, the answer to the debt crisis cannot be more borrowing,” he said.

He admitted that if the Tories were in power they would have little option but to borrow almost the same amount.

“If you’re saying we’re in a very deep hole and whoever runs the Government after the next election is going to have a very tough time with very big budget deficits, the answer to that has to be yes. But let’s be clear, we would be £12.5 billion better off, because we wouldn’t have done the VAT cut.”

The real problem in Britain was a massive credit crunch that meant businesses of all sizes were unable to get any money out of the banks, Mr Cameron said.

If the Conservatives were in power they would implement a National Loan Guarantee Scheme that would guarantee £50 billion of loans for small, medium and large businesses.

He said the Tories’ would be setting out plans later today on how to help savers, who had been hit by the cuts in interest rates intended to help business.

"We’ll be setting out exactly how we can do that and pay for it, reducing some of the burdens that (savers) have,” he said.

Mr Cameron said that in the long term he wanted to prune public spending and see a much larger private sector.

“Over time we’re saying you should hold the growth of Government spending below the growth of the economy and that means obviously that over time you will have a smaller state and a bigger economy,” he said.

He accused Mr Brown of using the recession as an opportunity to tear up the market system and return to 1970s-style interventionism.

“I think that’s what the Prime Minister is doing and I think that’s a huge mistake,” he said.

Labour accused Mr Cameron of wishful thinking, and said that the Tories did not have the resources to fulfil their promises.

“The really hard question for (Mr Cameron) is, given that he’s not going to say we need to have more help now - where is the money for the initiatives that he will be talking about coming from?" asked James Purnell, the Work and Pensions Secretary.

“He’ll be trying desperately hard to say he’ll be making these initiatives available without extra money. That’s a bit like those diets which say you can eat as much as you want to but you’ll still lose weight. It’s too good to be true and people will know it’s too good to be true.”

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