As the eurozone teeters on the brink of collapse, the UK Treasury is working on a contingency plan to limit the fallout of a potential full-scale euro meltdown.

­The plan would entail capital controls to restrict the flow of money in and out of the country. 

Officials fear the departure of a eurozone member might trigger capital flight from weaker members of the economic union to countries like the UK, driving up the price of the British pound and destroying the government’s plan to recalibrate the economy towards exports, the Telegraph reports. 

Perhaps even more alarmingly, Britain is also prepared to close its borders and airlift as many as one million holidaymakers and expats from afflicted countries.

As the Office for Budget Responsibility was forced to downgrade prospects for economic growth in November, the UK economy is now expected to expand by a sluggish 0.6 per cent in 2012.

The country took another hit when the Centre for Economics and Business Research (CEBR) announced that Brazil had overtaken the UK as the world’s sixth-largest economy. 

And with Britain’s top four banks having £170 billion of exposure in flagging EU members in the form of loans, a euro collapse could spell further catastrophe. 

However, financial analyst Robert Oulds told RT that while the UK Treasury “is mainly focusing on problems caused by the collapsing euro,” it would also be beneficial if “the eurozone did indeed collapse.”

Oulds argued that European leaders were fundamentally misguided in attempting to “to shore up the eurozone by having greater degrees of centralization.” 

As the single currency “has hurt competitiveness in many rim nations of the eurozone” and “damaged economic growth,” he says smaller member states “cannot grow their way out of the debt crisis that they’re in.” 

Oulds also argues that recent attempts to save the euro have forced already vulnerable countries into debt spirals which are only intensified by austerity measures, meaning “that they still cannot pay back the money that’s owed to various financial institutions around the globe -particularly French and German banks.” 

He believes at this point there are fundamentally two options left: to inject trillions of dollars from nations like France and Germany to shore up the Mediterranean rim nations that are struggling, or to have an orderly breakup of the eurozone.

Despite the initial shock, Oulds says Europe as a whole would be far more prosperous in the long-term.

“The banks would of course have problems. If there were to be a major default, if the euro collapsed, of course there would be less money going into those banks, but other financial assets would rise. And if there were to be a breakup of the euro, then the German currency would rise in value.  And so if there were to be two euros in a sense – a southern euro of a lower value where those countries could then gain competitiveness – that would then mean economic growth would be restored.”