With only 31 debugging days to the millennium, some firms are in peril

MANY SMALL British hotels, restaurants and construction companies could be driven out of business by the millennium bug computer problem in the new year, the Government's watchdog warned yesterday.

Don Cruickshank, head of Action 2000, the official body dealing with "year 2000" computer problems, said tourism and construction companies with fewer than 250 employees seemed less well-prepared than the average.

"In the hotel and restaurant sector only 71 per cent seem ready, and in construction only 88 per cent," Mr Cruickshank said. "They should remember that this is a competitive sector, where companies spring up and go out of business much faster than in other sectors.

"If they have millennium bug problems it doesn't have an effect on the wider economy - they are not part of the supply chain - but it could be the final straw that drives them out of business. If you're trying to book a hotel in Torquay and its computer is down, you will go to the one next door."

For Britain as a whole, he said that the picture was encouraging. Of the largest companies, the FTSE 500, 99 per cent reported that they expected no material disruption from the bug, which is caused by some computer programs not being able to distinguish that dates in 2000 come after those in 1999. Mr Cruickshank said: "Most of those companies have been working on this since 1997. But that's not true around the world. You can't just throw resources at this project." Problems may also arise because 2000 is a leap year - in programs that calculate interest, for example.

An independent analysis by International Monitoring, a consultancy based in London, suggests that the US, Britain and Russia will be among countries that experience the most bug effects. But Nick Gogerty, a senior analyst who has investigated the readiness of different countries, said the UK was one of the best-prepared and the best-informed on the bug.

Countries such as Italy, which began to set up a body to investigate its readiness for the millennium bug in January, 18 months later than Britain, and by March still had no formal offices for the body, are in a much worse position. "Italy is probably the least-prepared country in Europe," Mr Gogerty said.

While International Monitoring's scale of readiness shows that the UK and US are among the best prepared, Mr Gogerty said that both countries will have many bug experiences simply because they have a lot of computers. Russia is also potentially dangerous because, although it has less technology, much of it is old.

Some less-developed countries that appear unprepared will cope with breaks in power. "If you're already used to sporadic power and telephones, you won't be shocked when it happens," Mr Gogerty said.

WORLD OF DIFFERENCE

n Countries worst prepared for the millennium bug: Egypt, Oman, Qatar, Liberia, Belize, El Salvador, Bangladesh, Moldova, Niger, Somalia, Madagascar and Tajikistan.

n The manufacturer Otis is putting stickers in its lifts, advising: "Our elevators are millennium-proof, but if you have any doubts, use the stairs."

n Weight Watchers, the slimming food company, has achieved "Y2K" compliance by dumping its computer systems. Its 272 centres will be paper-based by January.

n An Egyptian water-treatment system declared "Y2K ready" was found to have a date-sensitive gauge controlling the release of chlorine gas. It could have malfunctioned.

n Americans' fears of a "meltdown" were revealed in a recent survey: 55 per cent plan to withdraw two to six weeks' cash and 65 per cent may sell stocks before 31 December; 67 per cent plan to store 7 to 18 days' food.