The 150 seat short haul market was the holy grail for many years, being such a big market from the 1980's onwards.
In the 1970's many projects, Anglo-French Jet 2, various planned tie-ups by Dassault/MDD, Fokker MDD, traditional-style national projects like BAC-1-11-800, Mercure 300, a HS
Trident development with 2xJT10D engines, various German/Dutch/French projects.
But as Airbus grew in stature, the logic was to go with them, on an all new design.
Just making an aircraft with no radically new features seemed safer, but what would that offer that the newly announced B737-300 could not?
So Airbus took a risk with the FBW A320.
A risk which paid off