Since the European Union has neither significant transfer payments nor much labour mobility, any EMU member in similar straits would be unable to cushion the blow. But the EU's members are much less economically specialised than America's states. The structures of the European economies have converged over the past 20 years, making them less vulnerable to asymmetric shocks. Britain, for example, is no longer an oil economy, while Spain, Portugal and Greece are developing broadly based manufacturing and service sectors, making them less dependent on agriculture. Economic shocks affecting only one EU country are now extremely rare.
Most shocks affect groups of countries or regions within countries.
Thus the current Asian crisis has had a similar impact on the EU's major economies and therefore has not affected exchange rates between them. Finland also suffered in the early 1990s, when the collapse of the Soviet Union destroyed its principal export market. Let us suppose, however, that some dreadful event damages one EU economy and not the others. The answer is to use national fiscal policy. Each government remains free to increase its budget deficit to stimulate demand.