David told an audience in the City that ministers were wrong to blame the recession on the eurozone crisis.
Growth, he said, was being held back by high taxes, an overly-timid approach to cutting the deficit and lack of support for the small and medium-sized businesses who create “most of the country’s employment”.
But he stopped short of saying the chancellor, George Osborne, should be replaced in this week’s expected reshuffle.
“It is the 11th hour,” he warned, “But not the 59th minute”.
Mr Osborne was, he said, “Clever enough, smart enough and brave enough to do what has to be done”.
He urged the chancellor to adopt a more bold approach, similar to the one upon which Margaret Thatcher embarked in the early 1980s, and criticised the current government by saying “small measures are not enough”.
There should be less “headline grabbing trivia,” he added.
In the week the Prime Minister is pushing for more infrastructure projects, Mr Davis warned, “We should be incredibly cautious about spending money we don’t have on infrastructure projects”.
On the resistance of the Liberal Democrats to adopt a more bold approach on tax cuts and lower public spending he said, “I don’t care if they scream and shout”.
If the chancellor does not use the powers he has, Mr Davis warned, “We’ll all be out of a job”.