Hours after Conservative heavyweight Michael Gove said Liz Truss was on a "holiday from reality", the Tory leadership front-runner said there was "too much talk that there's going to be a recession" and insisted an economic slump is not inevitable.
The UK Foreign Secretary suggested a "level of ambition" was needed to "change the orthodoxy" and avoid the outcome forecast by the Bank of England.
With the invasion of Ukraine forcing gas prices up, the bank this month said the UK could suffer its longest recession since the 2008 financial crisis.
The economy shrank by 0.6 per cent in June and forecasters predicted it would contract again in the final quarter of this year and throughout 2023.
But Ms Truss repeated her belief that such a scenario could be averted and pinned her hopes on immediate tax cuts spurring economic growth, as inflation continued to drive a cost-of-living crisis.
In an interview with The Sun on Sunday, she promised a "small business and self-employed revolution" to help turn the situation around.
"Those are the future big companies we need to develop — and why shouldn't Britain have the next Google or the next Facebook?" she said. "Why shouldn't it be a British company?
"It's about that level of ambition. There is too much talk that there's going to be a recession. I don't believe that's inevitable. We can unleash opportunity here in Britain."
Among Ms Truss's economic plans is a review of IR35 rules, which, she argues, "treat the self-employed the same as big business" and can force self-employed workers to overpay tax.
The regulations were introduced in 2000 to prevent tax avoidance by "disguised employees" who do the same job as an employee but evade income tax and national insurance by providing services through an intermediary, such as a personal services company.
Some high-profile TV personalities have been targeted under the rules.
UK doctors to prescribe cheaper bills?
Meanwhile, The Sun reported plans being drawn up by the Treasury for doctors to be able to write prescriptions to give people money off their energy bills.
Shadow health secretary Wes Streeting accused the Conservatives of having "lost the plot" with the proposal, as he reiterated Labour's plan to stop energy bills rising in winter.
Business Secretary Kwasi Kwarteng, a close ally of Ms Truss who is tipped to be her chancellor should she win the leadership race, said fresh support would be made available this winter as energy bills soar.
"I understand the deep anxiety this is causing," he wrote in The Mail on Sunday. "As winter approaches, millions of families will be concerned about how they are going make ends meet.
"But I want to reassure the British people that help is coming."
He said Ms Truss would "look at what more can be done to help families" but insisted it was "entirely reasonable not to detail the exact shape of that support until she has all the information to hand".
The pledge of assistance for families worried about the cost-of-living crisis represents a U-turn by the Truss team. The foreign secretary was in the early days of her campaign lambasted for rejecting "handouts" as a way to help people.
Tory MP and former minister Chris Philp, who is backing Ms Truss to succeed Boris Johnson, dismissed Labour’s proposal to freeze the energy price cap for six months in favour of slashing taxes and green levies.
The cap — the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy used — is set by the energy regulator Ofgem. It increased by more than 50 per cent in April and is set to rise further in October and again in January. Cornwall Insight, a market research company, forecasts that the average household will fork out £3,582 a year from October and £4,266 a year from January on energy bills.
“To be honest, taxing people to then fund an energy price cap freeze is putting a sticking plaster on it,” Mr Philp told Sky News. “It’s not dealing with the actual problem. What we need to do is help people get through this coming winter.”
Mr Philp said it would be better to address the “underlying problems” behind the cost-of-living crisis, and highlighted the large amount of gas imported by the UK, which he said “puts us at the mercy of these international gas price increases”.
“Ultimately, that is what will fix this,” he said. “Getting more gas out of the North Sea, getting fracking set up where local communities support it, getting our nuclear programme rolled out and making sure the tax burden is lower so people keep more of their own money. There’s no point taking more money off people in tax and then giving it back to them in the form of some kind of energy subsidy. Better to not take it off them in the first place.”
Conservative MP Alex Chalk, a backer of Rishi Sunak in the party's leadership contest, said the former chancellor was clear that soaring inflation must be a top priority in the battle to reduce the harm done to families by the cost-of-living crisis.
“The critical thing for the next prime minister is going to be how you address this challenge, the judgments you make,” Mr Chalk told Sky News. “And what Rishi has said from the outset is that unless we get on top of inflation, that force that Margaret Thatcher called the greatest destroyer of all, then everything else is far more difficult to deal with because, of course, it erodes your ability to pay for the National Health Service, it erodes your ability to pay for defence and so on.”
Concerns linger within Conservative ranks that the protracted leadership contest is damaging the party's electoral prospects, with the last two candidates rubbishing each other's ideas.
A new poll by Opinium gave Labour an eight-point lead over the Conservatives, the largest since the pollsters introduced new methodology in February.
The survey of 2,001 adults this week put Labour on a 39 per cent vote share to the Tories' 31 per cent, while it also found respondents preferred opposition leader Sir Keir Starmer to both Ms Truss and Mr Sunak.