by Phil Pitt

Kent's economy is still fragile but has weathered the recession better than the rest of the UK, according to one of the county's business experts.

And one of the key reasons is trust.

Maidstone-based Nick Rowell, director of policy at the Kent Invicta Chamber of Commerce, made the comments in the wake of a national survey which showed business has just avoided a so-called double-dip recession.

"Kent has suffered less than the UK at large and has even done better than the rest of the South East," said Mr Rowell.

"Sales started recovering sooner in Kent and improvements were coming in two or three quarters ago. Nationally they have only really picked up in the last quarter according to the national survey from the British Chambers of Commerce to which we contribute."

But there are still some areas of worry, not least manufacturing which was in retreat in some parts of Kent.

"Cash flow is dire in some areas of manufacting in Kent. Some firms in that sector reported cash flow was deteriorating compared with previous surveys; that does not bode well," said Mr Rowell.

"Historically business insolvencies peak a full year after an economy comes out of recession."

On the bright side, exports have been picking up as well as sales levels in the service sector in Kent.

Mr Rowell believes one key reason for Kent's resilience during the recession has been trust, and this is helping smooth over some of the cash flow issues hitting businesses elsewhere in the UK.

"Kent's pattern of trade is local and regional and people keep trading because they have known their trading partners and suppliers for years, they trust them and they know they will pay eventually.

"That pattern of trust has not been eroded as much in Kent as it has been elsewhere and the county's economy is benefitting from it."

Cash flow is key to all firms, but is crucial to many small businesses in particular. It gets squeezed during a downturn when customers try to take as long as possible to pay for goods and services.

Jason Small, area manager for mid-Kent with Barclays, says this can mean companies don't take up lines of credit even when they are granted. "The biggest problem I hear when talking to businesses is the issue of late payment. Many customers are struggling with cash flow problems caused by customers not paying invoices on time.

"This is making some companies wary of taking loans for commercial premises or equipment to take on new contracts because they fear that they will not be paid. This means that many of the loans that we sanction are not then drawn down by the customer."

But Mr Small shares Nick Rowell's optimism. "Kent has always been entrepreneurial and opportunities arise, even in a recession, and we have seen phenomenal growth in the numbers of people starting new businesses. Some of these are people who have been made redundant and are striking out on their own, but many are simply taking advantage of low interest rates and gaps in the market.

"With every recession comes opportunity and as long as these new businesses can remember that cash flow is king there is every chance that they will do brilliantly as Kent comes out of recession."