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Liz Truss castigated Rishi Sunak's "doom and gloom" approach to the economy during another Conservative leadership debate in which the candidates appeared willing to trash the party's own record in government.
The foreign secretary, who sat alongside the former chancellor in Boris Johnson's cabinet for more than two years, suggested the government's raising of taxes to help recover from the pandemic was the wrong strategy - and that Britain faced a recession.
"This chancellor has raised taxes to the highest rate in 70 years, and we're now predicted a recession," she said.
"The truth is in the figures."
But the tax-cutting plan being pushed by Ms Truss was rubbished by her rival, who said there was "nothing Conservative" about the idea and would give the party "absolutely no chance" of winning the next election.
Economic policy remained the key dividing line in a fiery programme which also saw the pair grilled on China and even their dress sense, in their first TV debate since reaching the final two in the Tory leadership race.
They came out neck and neck in a snap Opinium poll of who performed best, with Mr Sunak just ahead at 39%, compared to Ms Truss at 38%.
The debate kicked off with a particularly heated discussion about the economy - which has been a key dividing line in the race to succeed Mr Johnson.
Former chancellor Mr Sunak claimed there is "nothing Conservative" about Ms Truss's approach, while she accused him of "doom and gloom" economics.
As well as reversing the National Insurance tax hike, Ms Truss has said she would put an economic growth plan in place "immediately" if she becomes PM, along with imposing a temporary moratorium on the green energy levy.
Ms Truss said her plans would see the government start paying down the debt in three years' time, but Mr Sunak hit back: "You've promised over £40bn of unfunded tax cuts - £40bn more borrowing.
"That is the country's credit card, and it's our children and grandchildren, everyone here's kids will pick up the tab for that. There's nothing Conservative about it."
Mr Sunak has insisted the tax burden - the highest for 70 years - was the result of the unprecedented levels of government spending needed to keep the economic afloat during the COVID pandemic.
But Ms Truss said no other country was putting up taxes and accused Mr Sunak of having no plan for growth.
He spoke over Ms Truss a number of times as he warned inflation was a problem in the 1980s, and it is a "problem we have now".
But Ms Truss hit back: "This chancellor has raised taxes to the highest rate in 70 years, and we're now predicted a recession. The truth is in the figures."
The pair also clashed over China, as Ms Truss claimed Mr Sunak's new tough stance was "driven by the Foreign Office".
Ms Truss was also asked about her suggestion in last week's debate that her comprehensive school background would make her a better prime minister.
But it wasn't all bad-tempered, with the foreign secretary at one point complimenting Mr Sunak's dress sense.
Earlier on Monday, Culture Secretary Nadine Dorries hit out at Mr Sunak by comparing his expensive suit and shoes to Liz Truss' £4.50 Claire's Accessories earrings - and it caused quite a stir.
When asked to address the issue, Mr Sunak said the leadership hopefuls should be judged "by their character and their actions".
He said he "wasn't born this way" as his family emigrated to the UK 60 years ago, and he had previously worked as a waiter at an Indian restaurant.
Ms Truss would not completely disown Ms Dorries' comments, but she did appear to distance herself from them as she said she wasn't sure where the £4.50 claim about her earrings came from.
And she said she does not have "any issue with how expensive anybody else's clothes are" and is "not going to give Rishi fashion advice", adding she is a "great admirer of his dress sense".
The future cabinet
In another rare sign of harmony, both candidates said they would want the other to be involved in their government - although allies of Ms Truss were reported to have said Mr Sunak had demonstrated "aggressive mansplaining and shouty private school behaviour" during the debate.
On Mr Johnson, Mr Sunak said the outgoing PM is "one of the most remarkable people I've met" but said he would not let him serve in his cabinet if he were to become prime minister.
He got a round of applause when he said he resigned "on principle" as "enough was enough" due to issues over conduct and the economy.
Ms Truss would not say what it would have taken for her to resign, and stressed her reason for not doing so was out of loyalty to her current boss. She would also not answer directly when asked if she would allow Mr Johnson to serve in her cabinet, instead saying she did not think that would happen because she believes he "needs a well-earned break".
However, when pressed she eventually said he would not be part of her top team, saying: "I am sure he will have a role, I am sure he will be vocal, but he will not be part of the government."
The heated debate came after a weekend that saw allies of the two Tory leadership hopefuls trade increasingly personal attacks.
The studio audience in Stoke was made up entirely of people who voted Conservative at the last general election, and applauded more often for Mr Sunak.
But the latest betting odds still have Liz Truss as favourite to win the Tory leadership.
Rishi Sunak and Liz Truss will take part in a head-to-head debate on Sky News on Thursday 4 August at 8pm hosted by Kay Burley.
If you would like to be a member of the live studio audience and be in with a chance of asking a question, please apply here.