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Tuesday, August 3, 1999 Published at 08:27 GMT 09:27 UK

Business: The Economy

Small firms ignore Millennium Bug

Millennium Bug preparations are still behind schedule

A quarter of the UK's smaller companies have yet to take any precautions against the Millennium Bug, according to a survey by Action 2000.

The government-funded body said the "short sighted" firms were putting their shareholders' and employees' livelihoods at risk.

The BBC's Daniela Relph: "The scale of the changes has caused problems"
"The historical wait-and-see attitude of British businesses is not going to work against the Millennium Bug," said Gwynneth Flower, managing director of the Department of Trade and Industry-backed organisation.

"This shortcoming of British business could be its downfall," she said after publishing the survey of firms employing between 10 and 249 people.

Contingency plans

Bugtown UK
The problem arises because many computers have been programmed to recognise the year by the last two digits - so 1989 becomes 89, 1993 becomes 93 etc.

At the end of the year when the year moves from 99 to 00 many computers may crash or malfunction by thinking it is 1900.

Remedying the problem involves a fairly simple rewriting of computer code, but first those systems which may be hit have to be identified - something which Action 2000 found many UK firms had yet to do.

"Our figures are cause for concern. We have been reporting our research for more than a year now and yet there is still a hard core number of companies that are adamant that they need do nothing.

The least prepared segment were those firms employing between 20 and 99 people, of which 40% were not doing enough work on the bug, said Ms Flower.

"These 40% employ around one million people. Do they really want to put not only their own, but their employees' livelihoods on the line?" she added.

By contrast both big business and the smallest firms - those employing fewer than 10 people - have done more to ensure their systems will be able to cope with the date change.

Economic disruption

But Gwynneth Flower warned that the lack of readiness among surveyed firms could lead to a knock on effect as failures among suppliers and customers hit those who had taken steps to ensure minimum disruption.

Another problem was that four out of five had no contingency plan in place.

Action 2000 is not worried about a complete breakdown of society, but a series of smaller business collapses which could, when combined, have a knock-on effect on the wider economy.

Ms Flower said that widespread adoption of sensible contingency plans was the best thing businesses could do to ensure they would be able to operate in the New Year.

It is widely expected to have ongoing effects on computer systems for several months before and after the date change.

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