John McDonnell has accused Philip Hammond of being "cut off from the real world" as he warned public sector workers have been "ignored again" by the Government.
The shadow chancellor labelled Mr Hammond's "complacency" as "astounding" during the Spring Statement, before sounding warnings over the state of the UK economy.
Mr McDonnell also hit out at "Tory bully boys" for shouting him down, with Chancellor Mr Hammond firing back: "This is the man who still refuses to apologise to the Work and Pensions Secretary (Esther McVey), so I don't want to hear anything about bullying from the benches opposite."
The pair clashed after Mr McDonnell had responded to Mr Hammond's latest key financial statement to the Commons, with the Labour MP saying: "We face in every public service a crisis on a scale we've never seen before."
Mr McDonnell added: "Hasn't he listened to the doctors, the nurses, the teachers, the police officers, the carers and even his own councillors?
"They're telling him they can't wait for the next Budget. They're telling him to act now. For eight years they've been ignored by this Government and today they've been ignored again.
"The Chancellor has proclaimed today that there's light at the end of the tunnel. This shows how cut off from the real world he is."
Mr McDonnell said the Tories had added £700 billion to the national debt over the past eight years.
He added: "The reality is that the Chancellor and his predecessor have not tackled the deficit. What they've done is they've shifted it on to the public services his colleagues are responsible for."
Mr McDonnell raised concerns over council funding, schools and emergency services, among other things.
He described the statement as "another missed opportunity", telling MPs: "People know now that austerity was a political choice, not an economic necessity."
Mr Hammond criticised Mr McDonnell for his "bully boys" remark and later said of Labour's economic approach: "Every now and again the mask slips and we get a glimpse of the sinister ideology that lies beneath, an ideology that would wreck our economy if he ever gets anywhere near the controls."
He defended the Government's spending plans, adding: "He reels out the same old bogus statistics on regional distribution, I think he's got the briefing from Russia Today.
"No-one watching our exchanges today can be in any doubt that Britain faces a choice: we have a plan to get our economy growing, the shadow chancellor says it doesn't matter whether GDP grows or not."
Mr Hammond said he thought the economy may be on the "beginning of a turn in the trajectory of productivity performance".
He made the prediction after Tory Jeremy Quin (Horsham) said he welcomed the "improvements we have seen in productivity over the last six months".
Mr Hammond replied: "(Mr Quin) is right to draw attention to two quarters of very good productivity data.
"I don't want to change policy or pivot on the basis of two quarters' data because data can be revised, but I have to say that we are starting to think that possibly we may just be at the beginning of a turn in the trajectory of productivity performance in this economy."
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