British tourism is likely to suffer next year as a result of the move to a common European currency, according to the head of the British Tourist Authority.

The industry has already been badly hit by the foot-and-mouth crisis despite attempts by politicians, including Tony Blair, to bolster Britain's image abroad by holidaying at home. The prime minister and his family begin a short break in the south-west later this week.

David Quarmby, the BTA's chairman, said overseas tourism earnings, amounting last year to £12.8bn, could be hit by one or two percentage points after euro notes and coins replace national currencies in 12 countries by the end of February 2002.

"The disadvantage of changing a currency to come here will become more evident," said Mr Quarmby. The cost of foreign exchange is usually 1 to 2 per cent of the amount converted - which could be enough to deter continental Europeans from travelling to Britain in favour of visiting eurozone countries instead.

Europeans account for two-thirds of the 26m visitors to Britain and half its earnings. In the first six months of this year, the number of European holidaymakers to the UK fell by 18 per cent, according to government figures, mainly due to foot-and-mouth.

The BTA has forecast a fall in overseas tourism earnings this year of between 10-15 percentage points due to the crisis -a drop of £1.3bn-£1.9bn on last year's £12.8bn.

Even before the outbreak of foot-and-mouth, British tourism faced a problem in trying to reverse a fall in its share of the European tourism market due to the strength of the pound.

Richard Tobias, chief executive of the British Incoming Tour Operators Association, said that if the euro weakened further against the pound, British tourism would suffer.

"There is no question that Britain is expensive compared to some European neighbours. If the euro is weak when fully in circulation, Britain will be disadvantaged through cost," he said. Mr Tobias said 75 per cent of the association's members thought joining the euro would benefit British tourism by weakening the value of sterling.

He said the association's members had thought an appropriate exchange rate would be DM2.65 to the pound when they last considered the question two years ago.

The BTA estimates that the 25 per cent depreciation in the euro since 1996 has cost British tourism a potential £2bn in lost overseas earnings.

However, the strength of the dollar against the pound has boosted visits from the US, Britain's largest single inbound market, by 32 per cent over the past five years.