pounds 400bn crisis as Millennium Bug makes date with computers

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Businesses and governments across Britain are being threatened by a computer programming bug that could cause havoc at the turn of the century and cost up to pounds 400bn worldwide to put right, according to computer experts.

The problem, dubbed the Millennium Bug, evolved because programmers in the 1960s and 70s, in order to save computer memory, used a two-digit format to show the year - so 1996 was simply 96.

But at the turn of the century, since the systems are coded to assume that all years begin with 19, computers will interpret 00 to mean 1900. If the anomaly is not rectified, everything from cash machines and bank statements to mortgages, bills and money transfers, or all calculations and computer processes based on the computer two-digit year, will fail or produce incorrect results.

"The year 2000 will cost in the region of $600bn [pounds 400bn) worldwide to correct," British computer operations manager John Ashley told a conference last Tuesday, citing data from US-based technology consultant, Gartner Group.

"Fifty per cent of companies will not achieve compliance in the year 2000 and 10 per cent of companies will go out of business," he said.

Britain's Central Computer and Telecommunications Agency (CCTA), which organised the one-day meeting, agreed that the costs of solving the problem, which involves changing millions of lines of data, will be huge, but "the consequences of failing to do so could be disastrous".

Thirty years ago most programmers assumed the systems they were working on would be replaced by 2000 or that the problem would be solved long before the turn of the century, said Canadian computer consultant Peter de Jager.

But with only 140 weekends to go before programmes to correct the Millennium Bug must be installed and tested, 90 per cent of British firms have done nothing about it.

"Getting people to believe that it is a real problem is difficult," Mr de Jager said.

He urged companies to identify critical systems which their businesses depend on, to develop a strategy to sort out the problem and to schedule a full year of testing new programmes before the year 2000: "Time is running out."