Mr. Marco Buti:

I joined the Commission in 1987. I was not directly in charge of these matters at the time. However, we had an important debate within the directorate-general at that time. Ireland was growing strongly. There was the Celtic tiger. There was a draft budget which was procyclical, meaning it was adding oil to the fire. At the same time, there were several other countries in much poorer condition.

In my opening address, I indicated the growth in Ireland and the growth in the rest of the euro area, where there was much higher debt and higher deficits. The issue was whether we should come out pinpointing Ireland, which was the poster child of Europe, with a recommendation. There was a genuine discussion on whether we would be getting it right by doing so. In retrospect, what was done was right. While group think, also called the great moderation paradigm, affected most observers at the time, the recommendation strayed outside this common view.

The Commission was deeply criticised at the time. In Ireland, it was very badly received. The Senator may remember the huge controversy. Europe was pinpointing Ireland when it was doing so well. Why does it not look elsewhere? Not only some but many academics criticised the Commission saying, "You are just looking at decimals. You are bureaucrats." In retrospect, it was the right approach. In a sense, this recommendation was the embryo of what we have done later on in terms of focusing on having the right fiscal stance for Ireland and other countries. In a boom period, fiscal policy has to be very cautious and restrained in order not to be behave in a procyclical way. It was, therefore, an important moment.