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British businesses warned not to cut back on lunch and travel expenses

Nearly two-thirds of firms have now scrapped or reduced lunch allowances, according to a new survey.

More than 60 per cent of the 2,000 firms canvassed by Employment Law Advisory Services (Elas) said that they had curtailed client entertainment expenses, while 52 per cent had "cut back severely" on travel.

Peter Mooney, head of consultancy at Elas, said: "Employers are wise to reduce their overheads, but they need to keep a sense of proportion. New business is the life blood of any commercial enterprise and is often won by personal contact – so some corporate socialising should be encouraged, provided it is pertinent."

The survey also found that 57.5 per cent of firms had scrapped or reduced evening meal allowances, while 56 per cent had done the same with overnight expenses.

Mr Mooney said: "There are health and safety implications. Tired and hungry employees make mistakes."