Firms in the South East have experienced a boost in sales and orders over the last six months.

The improved trading has reversed the threat of prices and profits tumbling out of control, according to the latest Business in Britain survey from Lloyds TSB Commercial.

More than 50 per cent of firms in the South East reported a rise in sales during the first half of the year compared with only 30 per cent that saw sales decline.

This is a vast improvement on six months ago and means sales growth is now above the average for the UK as a whole.

In addition, South East businesses have been able to implement internal cost-saving measures to improve efficiency.

This means they have been able to maintain profit in a period when firms across the country are facing fierce downward pressure on prices.

This has resulted in 29 per cent of firms reporting a rise in profits compared with 30 per cent for the UK as a whole and 24 per cent six months ago.

Richard lwinski, area director for Lloyds TSB Commercial in the South East, said:

"Steady investment six months ago is reaping rewards as firms are showing greater efficiencies, which are now impacting directly on the bottom line.

"This also explains why the region is experiencing fewer cashflow problems with only 16 per cent reporting difficulties compared with 19 per cent across the UK and 22 per cent six months ago.

"The low inflation environment in the UK looks set to continue so firms are being more realistic about their ability to raise prices in the near future.

"However, by beginning to adopt new ways of managing internal costs - like e-procurement practices for central purchasing - firms are expecting an upturn in profitability during the second half of the year."

But along with the good news comes a word of warning from risk management company Smithson Mason.

The firm says profits are bound to be hit by legislation brought in at the beginning of the month.

Under the legislation, part-time staff are entitled to the same pay, pensions, training and holidays as their full-time colleagues.

These rights have also been extended to included homeworkers, contract and agency workers.

Smithson Mason risk director Graham Wright said: "Firms need to review employment contracts for all part-time and full-time staff who are doing the same type of job, taking into account qualifications, skills and experience when assessing levels of pay."