FOOT and mouth disease has damaged business for one of Europe's biggest rental companies, adding to pressure for further rental rate increases. Avis Europe has announced that the epidemic has led to a downturn in business both from tourists and domestic travellers.

At the company's annual general meeting, the firm revealed it had achieved double digit growth and said operating margins remained strong. But chairman Alun Cathcart added: 'After a good start to the year's trading in our UK business, the market is showing some signs of the impact of the foot and mouth crisis on domestic and inbound travel.'

His comments came after the rental industry last week warned of a series of price increases of up to 25% should be expected by fleets as the industry tried to fight for profit. The Institute of Directors backed the firm's comments, saying that a third of its members had been affected by the epidemic and estimated that the outbreak could cost business £40 billion if it continued to July.

Ruth Lea, head of the policy unit of the IoD, said: 'The foot and mouth outbreak is clearly having a major impact on business, and not just on farming. Average losses could be up to £125,000.'