Osborne accused of 'lurch to right'
Ed Balls has dismissed concerns that Labour has shifted to the Left - insisting it is the Tories who have abandoned the political centre ground.
Drawing battle lines for the looming general election, the shadow chancellor stressed that the party was committed to eradicating the deficit.
But he argued that Chancellor George Osborne had lurched to the extreme by proposing drastic shrinkage of public spending.
The comments, in an article for the Guardian, appear to be a rebuttal of Tony Blair's Economist interview in which he suggested that Labour had strayed from the centre ground.
The former prime minister has denied he was criticising Ed Miliband, saying he expected the Opposition to win the poll battle in May.
Mr Balls wrote that last month's Autumn Statement had been a "defining moment" - "the day the Chancellor, George Osborne, ceded the political centre ground to Labour".
"While he lashed out at the BBC for reporting the facts, the Institute for Fiscal Studies said these plans would mean 'colossal cuts' to public services and the Office for Budget Responsibility concluded they would take public spending as a share of GDP back to 1930s levels," he said.
"Let me be clear, including to those who would wish it were not so: Labour will need to cut public spending in the next parliament to balance the books.
"But Ed Miliband and I do not believe a 35% state can be sustained without causing huge damage to our NHS, policing, defence, local services and economic infrastructure."
Mr Balls said Mr Osborne's "increasingly extreme and ideological approach" went "far beyond the necessary task of deficit reduction".
"It is a risky second-term Conservative project to shrink the state - a lurch to the right which has left Labour as the centre-ground alternative," he wrote.
"So the economic choice at the election is now stark and clear. Do we adopt a Labour plan to change our economy, so that it works for working people again and to get the deficit down in a tough and balanced way? Or do we carry on with the same failed Tory policies and slash public services to a level of national income last seen in the 1930s?"
Mr Balls said the Chancellor faced a "credibility problem".
"His original strategy - to balance the books by this year and go into the election having delivered tax cuts - lies in tatters.
"Instead he has gambled on people supporting a dramatic shrinking of the state and a £7 billion promise of unfunded tax cuts which could be paid for only by another VAT rise or even deeper cuts to public services - or both."
A Conservative Party spokesman said: "Ed Balls is confirming that Labour will borrow more and raise taxes in the next Parliament. That would put our economy at risk and undermine all the progress we have made since Labour's Great Recession.
"Ed Miliband has no economic plan to secure Britain's future. That's why he is simply not up to the job."