George Osborne’s approach to deficit reduction as revealed in this week’s autumn statement will mean the destruction of the post-second world war consensus about the role of the state, the shadow chancellor has said.

In a Guardian interview, Ed Balls promised that Labour would cut the deficit year on year. But he said David Cameron and Osborne had vacated the centre ground of politics and were emerging as more extreme than even Margaret Thatcher. “If, at the end of the next parliament, George Osborne actually got his way and brought spending back down to the level of the 1930s, I don’t think this would be the kind of country any of us would want to live in. I don’t think it is the kind of country I would want my children to grow up in.”

Balls has been emboldened by the analysis of the spending implications of the autumn statement given by the Institute of Fiscal Studies and the Office for Budget Responsibility, especially the IFS claim that the cuts in the unprotected departments would be “colossal”.

He argues that the IFS analysis shows his more flexible plan to cut the deficit, including raising taxes on the wealthiest, represents the sensible centre ground of British politics.

Balls clearly feels a political opportunity has opened to show how the living standards squeeze is not just tough for workers, but also destructive of the public finances, so welding two disparate Labour arguments. He points out that the OBR is projecting that lower than expected earnings will hit tax receipts for another four years.

Balls’s language suggests a new confidence. He said: “I think it will mean the destruction of the consensus that has actually held in the country since the second world war about what kind of country we want to be and the kind of Britain this is. I don’t think this would be the kind of country I want to live in, a kind of society where people hide behind fences because there are no neighbourhood police or a society where children born from less privileged backgrounds have no chance of catching up. I don’t want to live in a society where people cannot afford national insurance because there is no health service to look after them when they are sick, or a kind of society that has to retreat from our international obligations. That is where Osborne is taking us.

“There is no chance we would be able to stick to our aid pledge or the commitment to defence spending to 2% of GDP. It would make our country weaker not stronger and we would face in and not out as a society”

The Conservatives claim such cuts have been achieved in the first parliament and the IFS has misunderstood the way welfare cuts and efficiency savings could reduce the £55bn cuts indicated.

Balls, still trailing badly on personal economic credibility, says Osborne will be rattled that the debate has so quickly shifted from individual populist measures, such as stamp duty changes, to a debate about whether the cuts are achievable or credible.

“David Cameron has been trying to pretend to people that 80% of the cuts have been made, but the OBR and the ONS have both said that is not true. There is more than 50% to go and they have now layered in a further huge cut due to the public finances worsening.”

It might be expected that such rhetoric would lead Balls to say there is no possibility of Labour trying to erase the current deficit by 2017-18, the deadline the coalition appears to have set itself. But Balls is going to keep his cards close to his chest. He said: “There will be cuts under Labour. I do not just want the current budget back into balance, I want it back into surplus. I have not said I want it in surplus at the end of the parliament, but as soon as possible in the next parliament.”

He offered a little more detail, saying

“I want to cut the deficit every year in the next parliament,”, but that the pace would depend critically on growth and living standards, the third leg in the debate on tax rises and spending cuts. The test for Balls will be whether voters focus on the cuts that are now close to explicit in the Tory plans or on the additional borrowing in Labour proposals. In new research, the Resolution Foundation think tank suggested on the basis of stated Labour plans Balls would need to implement between £7bn and £28bn of additional fiscal tightening in the four years from 2016-17, and the Tories a maximum £48bn of tightening.

Balls was speaking to the Guardian hours after completing his grade 4 piano exam, an event he realised had not been quite as daunting as responding to the autumn statement, a unique political moment when the shadow chancellor has to speak without any prior access to documents from the OBR on its implications. Last year, he was left badly discombobulated as Tory backbenchers threw him off his stride. This year, he had the benefit of the advice of Dennis Skinner, the veteran leftwinger. “He told me when the Tory backbench yelling began, don’t lean back and try to project over a wall of sound; the answer is to lean forward physically towards the microphone and focus on the chancellor.”

He was also helped by his boffins working in the whips’ office just outside the chamber. Within 20 minutes, a former Treasury number cruncher John Wrathmell processed the figures to unearth the fact that the borrowing figures had been revised up since the budget by £4.9bn this year and £7.6bn next.

Such is the cauldron that Balls feared he would add the two figures up incorrectly. “I thought this could be the most foolish thing I have ever done. Although it is quite a simple sum, it is not clear that you necessarily want to do the calculation live on television. I stood there thinking 4 plus 7 is definitely 11, and .9 plus .6 is definitely 1.5 so it must be £12.5. It crystallised the point that the public finances were getting worse, not better, and it had an impact on Tory backbenchers.”

Balls can only hope that in every sense his exacting examiners will agree he has made the grade with merit, if not distinction.