The millennium bug will cause so many problems that it cannot fail to have an impact on the world?s economy, warns one of the UK?s top economists.
David Kern, chief economist for the Natwest Group and head of its market intelligence unit, believes the bug will significantly slow down the UK?s growth, and will have a more severe impact in less prepared countries.
?I used to think this was purely a computer problem, but its a macro-economic problem as well,? Kern said. ?While I?ve never accepted the disaster scenario for the Year 2000 the cumulative effect of so many things going wrong will have an impact.?
Natwest Group has cut its growth forecast for the UK economy, which it had expected to grow by 2.4 per cent in 2000 without the bug. As it is, it now expects growth of 1.9 per cent, with the US and Canada also seeing growth reduced by 0.5 per cent. Continental western Europe will be reduced by 0.6 per cent.
Other countries will be more severely affected, with growth in Asia, Russia and the other former Soviet Union countries down 0.9 per cent, and Eastern Europe, Latin America and Pacific countries by 0.7 per cent.
?A country like Russia can?t afford to devote any resources to solving the Y2K problem right now,? Kern said. ?These countries have got other things to worry about.?
While some analysts, such as Ed Yardeni, chief economist of Deutsche Bank, have predicted a global recession because of Y2K, Kern is more sceptical. ?It?s a possible scenario but I don?t think its a likely one,? he said.
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