A euro zone breakup would be challenging for British exporters but there would be still be export opportunities both in Europe and in emerging markets, the head of Britain's trade and investment promotion agency said on Friday.
The government is making contingency plans for a possible split in the currency bloc, including a study of its impact on private companies, Nick Baird, chief executive of UK Trade & Investment (UKTI), told Reuters in an interview.
Across government we are doing a great deal of work in terms of what we would need to do in these circumstances and obviously that covers, more widely, what the impact would be on private companies, he said, when asked if the UKTI was studying the implications of a possible euro zone break-up.
The deepening euro zone debt crisis has led to speculation that one or more countries could be forced out of the single currency bloc.
EU sources said on Wednesday that German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone.
The implications of a euro zone break-up for British companies would be certainly challenging, Baird said.
I do not myself believe it will mean that we don't have markets there (in Europe). They will be much more difficult markets but it is also that opportunity to get out and trade with the growth markets (outside Europe), he said.
The euro zone is a key market for British products, with 40 percent of the country's exports headed there. Britain is a member of the European Union, but not of the euro zone.
Europe's economic problems have given added urgency to the British government strategy of working to boost exports and investment links with fast-growing emerging markets such as China, India, Russia and Brazil.
Despite the coalition government's efforts to rebalance the British economy, to put a greater emphasis on manufacturing, and to boost exports, figures this week showed Britain had a record trade deficit in September, fuelling fears the country could be heading for another downturn.
Nevertheless, Baird said British exports to large European countries have performed well so far this year, with exports to Poland up 30 percent between January and August year-on-year and exports to Germany, Italy and France showing double-digit increases.
I know it will probably get worse but at the moment they (exports) are holding up surprisingly well, both euro zone and non-euro zone, he said.
It could get worse, it probably will get worse, there will be an impact ... I don't think it will be so bad that companies can't continue to trade quite considerably into Europe ... and secondly it is a driver to make people think about the big growth markets if they haven't thought about them before.
Baird said Britain's trade figures with the big emerging markets were looking very good and he believed the goals the British government has set of doubling trade with both India and China within five years were feasible.
As for foreign investment into Britain, the trend was slightly down this year, although the fall was much less pronounced that it was for Britain's key competitors in Europe, he said.
A silver lining for Britain from the euro zone's problems has been that inward investment into Britain from Spain and Italy has been increasing, he said.
(Reporting by Adrian Croft; Editing by Toby Chopra)