Boris Johnson has been slapped down by Chancellor Philip Hammond over his economic plans for No 10.
He warned that the £27billion “fiscal firepower” built up in case of a no-deal Brexit would only be available if the UK leaves with deal.
The Tory favourite and his rival Jeremy Hunt have both made substantial promises on public spending and tax cuts during the race.
And both have suggested that their plans could be paid for from no-deal coffers.
Senior Tories warned that the two men were in danger of trashing the party’s reputation for economic competence.
One even claimed that the tax and spending pledges made during the leadership contest made Labour “look like moderates”.
A Cabinet minister told the Mirror that tax cuts were “for the birds” and that plans to cut stamp duty were “regressive”.
“It wouldn’t lead to boom and bust, it would lead to bust and bust,” they said.
The top minister branded Mr Johnson’s plans for an emergency budget to shore up the economy ahead of a no-deal Brexit “ridiculous” - adding that hardline Brexiteers who backed it were “economically illiterate”.
A senior Government source even warned that the pound could crash at the moment Mr Johnson was elected because of his support for no-deal.
It came as the Chancellor scolded: “The fiscal firepower we have built up in case of a No-Deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a No Deal Brexit will make in the public finances.”
He later told the BBC: “My concern is that this Government has built up a reputation for fiscal responsibility and the British people have worked incredibly hard over a decade now to rebuild our public finances and I think it’s very important that we don’t throw that away.”
Treasury select chairwoman Nicky Morgan said: “It seems too easy for Boris Johnson and Jeremy Hunt to forget just how tough it has been to get the public finances back into balance and the really difficult decisions that had to be made.”
And former Tory party chairman Lord Pattern added: “The debate is awful..with all the tax pledges and spending pledges making the Labour Party look like moderates”.
Paul Johnson, director of the respected Institute of Fiscal Studies, was also taken aback by the spending plans.
“It’s worse than a general election. Both candidates are falling over themselves to offer big tax cuts and spending increases, yet they provide no idea where the money will come from.”
The IFS said that Mr Johnson’s tax cuts plans for the rich would cost £9bn while his plan to increase the National Insurance threshold would cost £3bn. He has also earmarked almost £5bn on reversing school cuts.
His team said the commitments could be funded by the £26bn “fiscal headroom” which the Treasury has identified, provided there is not a no-deal Brexit.
But Mr Johnson has also said he would crash the country out of the EU without a deal on October 31.
Mr Hunt has pledged £13bn a year cuts to corporation tax, £11bn on raising the NI threshold and £12bn on defence spending.
Shadow chancellor John McDonnell said: “The spending promises being thrown around by both Johnson and Hunt once again prove that austerity was a political choice for the Conservatives and not an economic necessity.
“With the two trying to outdo each other on who is more likely to pursue a no-deal Brexit, and who can make the largest and most reckless spending commitments, both are putting our economy at risk and can’t be trusted to follow through on their promises to invest.”
