Ed Balls has urged George Osborne to pump money into construction, saying investing in the economy now could reduce the need for deep cuts in two years' time.
In a piece for the Sunday Mirror, Mr Balls said the fact Mr Osborne was having to set out cuts beyond the lifetime of the current parliament was a result of the government's "economic failure".
He made the comments ahead of the Chancellor announcing the next squeeze on spending as he sets departmental budgets for 2015/16.
Balls said the government should boost lending to businesses with a new British Investment Bank and reintroduce the 10p income tax band.
He added that ministers should "get construction workers back to work repairing Britain's broken roads and building the affordable homes we need".
The shadow chancellor acknowledged that Labour would have to show "iron discipline" with the public finances if it won the 2015 general election, but he insisted he would reduce the deficit in a "fairer" way.
Earlier on Saturday, Ed Miliband promised to be "ruthless" about pursuing Labour's public spending priorities despite accepting the need for further cuts beyond the 2015 general election.
The Labour leader said he would not make any promises on changes to the spending plans set out by the Chancellor unless he can be "absolutely crystal clear" where the money would come from as he set out the "hard reality" facing the party.
Despite this, Balls hit out at Osborne, saying: "While he pretends things are getting better, for ordinary families life is getting harder.
"Prices are rising faster than wages. The number of people on the dole for over a year is going up. And the result is the Tories aren't even getting the deficit down - the one thing they promised they would do.
"This economic failure is why David Cameron and George Osborne are being forced to make even more cuts to public services.
"But instead of planning more cuts two years ahead, they should use this week's spending review to boost growth and living standards this year and next year.
"More growth now would bring in more tax revenues and mean our public services would not face such deep cuts in 2015."
The IMF last month suggested borrowing up to £10 billion more now in order to bring forward infrastructure spending from subsequent years.
Mr Balls said last week's stock market falls showed "this is no time for complacency about weak growth and rising national debt here in Britain".
Labour has made a concerted effort to prove its credibility on the economy in recent weeks, with high-profile speeches from leader Ed Miliband and Mr Balls aimed at convincing voters the party can be trusted with the nation's finances in 2015.
Mr Balls said: "The hard reality is that if David Cameron and George Osborne carry on with the same failing policies, Labour will have to deal with a difficult situation after the next election.
"We will need to root out waste and have an iron discipline on public spending. And we won't be able to reverse cuts in day to day spending in 2015 unless we can find savings or extra revenue from elsewhere."
He added: "After three years of failure I hope George Osborne will see sense this week. But if he doesn't it will fall to the next Labour government to turn our economy around and get the deficit down in a fairer way."