ED MILIBAND risked walking into a Tory trap yesterday by joining the chorus claiming that reducing Britain’s deficit will be the defining general election issue, according to top economist Ann Pettifor.

Ms Pettifor said the Labour leader “struck a chord” by calling out Chancellor George Osborne’s Autumn Statement as “extreme” and “ideological.”

But the Prime Economics head warned that he had played in to Mr Osborne’s hands by putting reducing Britain’s deficit at the centre of his plan for government.

In his City of London speech, Mr Miliband made his first official pledge of the general election campaign not to borrow a penny more if his party wins power.

He described the pledge as an “essential test of credibility” for his party and insisted “there is no path to growth and prosperity for working people which does not tackle the deficit.”

But Ms Pettifor told the Star: “The deficit is not the most serious threat the people of Britain face.

“A broken banking system, unpayable debts, falling real wages and spiralling deflation are much graver threats to voters and to the economy.”

She gave the verdict after destroying Mr Osborne’s deficit myths live on Sky News hours after he delivered the Autumn Statement last Wednesday.

Ms Pettifor seemed to leave anchor Adam Boulton stunned when she explained how to cut the deficit through investment.

Asked by the right-wing hack if she was “saying that the deficit is not a problem?” the economic expert replied: “It’s not a problem at all.”

And setting out her alternative yesterday, she added: “By promising the people of Britain skilled, well-paid employment, and by tackling both the broken banking system and the overhang of private debt — Mr Milliband could offer the electorate a credible exit from the chronic, ongoing crisis of globalised capital.

“If Labour were to do that, the deficit would take care of itself.”

Mr Miliband announced that Labour’s spending review had identified £500 million worth of annual cuts that could be made to local government.

He said: “Our tough and balanced approach will balance the books through an economy based on high wages and high skills, common sense spending reductions and fair choices on tax.”

Balls tells colleagues: cut, cut, cut

ED BALLS wrote to his shadow cabinet colleagues yesterday, telling them: “It’s now clear the Tories have abandoned any pretence of being in the centre ground with an increasingly extreme and unbalanced plan.

“In contrast, Labour will take a tough but balanced approach to getting the deficit down.

“But as we have discussed a balanced plan to reduce the deficit will also require spending cuts.

“You should be planning on the basis that your departmental budgets will be cut not only in 2015/16, but each year until we have achieved our promise to balance the books.”