Dr. Eddie Casey:

I think Mr. Blanchard was referring to some of the earlier proposals that Germany put forward in the discussions. Some of the earlier evidence it gave suggested things would move much more back towards the 3% targets, which were much more core to the fiscal rules than they look like they will be. Of course this is still to be decided. He was emphasising the point that these hard rules which rely on the actual balances as they are at a point in time is a terrible idea. Every economist accepts this. They go back to a pro-cyclical approach, whereby if a country suddenly finds itself in a deficit or downturn it is a reflection of the economy doing really badly at a certain point in time.