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Big US banks warn more economic pain is coming
Three of the biggest US banks have set aside almost $28bn (£22.3bn) amid concerns about customers defaulting on loans due to the pandemic.
The decision helped to push Wells Fargo to its first quarterly loss since the financial crisis and weighed on the financials of other banks.
JP Morgan Chase profits roughly halved, while Citigroup’s plunged 73%.
The firms’ executives warned of a painful economic downturn ahead, despite recent positive data.
JPMorgan said it expected the US unemployment rate to remain at nearly 11% at the end of the year, compared to the 6.6% it forecast in April. The bank said it had set aside more than $10bn for losses, including nearly $9bn to build its reserves.
“We have prepared and reserved for something worse than our base case,” chief financial officer Jennifer Piepszak said.
‘Significant deterioration’
Citigroup, which has set aside about $7.8bn to cover potential losses, said it expected customers to default on nearly 3.9% of its loans, up from 1.8% in 2019.
“We are in a completely unpredictable environment… The pandemic has a grip on the economy, and it doesn’t seem likely to loosen until vaccines are widely available,” Citigroup chief executive Michael Corbat said on an earnings call.
At both Citigroup and JP Morgan Chase, increased trading activity helped offset a slowdown in consumer spending.
JP Morgan revenues rose 15% year-on-year to $33bn, with profits of nearly $4.7bn. Citi posted a net income of $1.3bn on revenue of almost $19.8bn, up 5%.
Fed acts to keep banks ‘prudent’ amid virus risks
Are Britain’s banks strong enough for coronavirus?
But Wells Fargo, which does not have a big investment banking business, swung to a $2.4bn loss in the quarter, compared to $6.2bn profit in the same period in 2019. The firm set aside $9.5bn to cover potential coronavirus-related losses, including $8.4bn in reserves.
“Our view of the length and severity of the economic downturn has deteriorated significantly from the assumptions used last quarter,” chief executive Charlie Scharf said.
It said it suffered loan losses of $1.1bn in the three months to July, up from $204m in the previous quarter, driven by hits to commercial property firms and oil and gas companies.
The UK’s mobile providers are being banned from buying new Huawei 5G equipment after 31 December, and they must also remove all the Chinese firm’s 5G kit from their networks by 2027.
Digital Secretary Oliver Dowden told the House of Commons of the decision.
It follows sanctions imposed by Washington, which claims the firm poses a national security threat – something Huawei denies.
Mr Dowden said the move would delay the country’s 5G rollout by a year.
The technology promises faster internet speeds and the capacity to support more wireless devices, which should be a boon to everything from mobile gaming to higher-quality video streams, and even in time driverless cars that talk to each other. 5G connections are already available in dozens of UK cities and towns, but coverage can be sparse.
Mr Dowden added that the cumulative cost of the moves when coupled with earlier restrictions announced against Huawei would be up to £2bn.
“This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run,” he said.
Because the US sanctions only affect future equipment, the government has been advised there is no security justification for removing 2G, 3G and 4G equipment supplied by Huawei.
However, when swapping out the company’s masts, networks are likely to switch to a different vendor to provide the earlier-generation services.
Huawei said the move was: “Bad news for anyone in the UK with a mobile phone” and threatened to “move Britain into the digital slow lane, push up bills and deepen the digital divide.”
New restrictions are also being applied to use of the company’s broadband kit.
The government has also been advised operators should “transition away” from purchasing new Huawei equipment for use in the full-fibre network, ideally within the next two years.
Mr Dowden said the government would “embark on a short technical consultation” with operators about this.
He explained that the UK needed to avoid becoming dependent on Nokia, which is the only other supplier of some equipment, and he wanted to avoid “unnecessary delays” to the government’s gigabit-for-all by 2025 pledge.
The action, however, does not affect Huawei’s ability to sell its smartphones to consumers or how they will run.
Chip concerns
The UK last reviewed Huawei’s role in its telecoms infrastructure in January, when it was decided to let the firm remain a supplier but introduced a cap on its market share.
But in May the US introduced new sanctions designed to disrupt Huawei’s ability to get its own chips manufactured. The Trump administration claims that Huawei provides a gateway for China to spy on and potentially attack countries that use its equipment, suggestions the company strongly rejects.
The sanctions led security officials to conclude they could no longer assure the security of its products if the company had to start sourcing chips from third-parties for use in its equipment.
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Media captionWATCH: The digital secretary says providers must remove all of Huawei’s 5G kit from their networks by 2027
The minister cited a review carried out by GCHQ’s National Cyber Security Centre as being the motivation for the changes.
The centre has blogged that it feared that Huawei products adapted to use third-party chips would be “likely to suffer more security and reliability problems”.
But other political considerations are also likely to have also come into play, including the UK’s desire to strike a trade deal with the US, and growing tensions with China over its handling of the coronavirus outbreak and its treatment of Hong Kong.
Some backbench Tory MPs had pressed for a shorter time-span for its removal, in particular there had been calls for the 5G ban to come into effect before the next election in May 2024.
However, Mr Dowden said that “the shorter we make the timetable for removal, the greater the risk of actual disruption to mobile phone networks”.
BT and Vodafone had warned that customers could face mobile blackouts if they were forced to remove all of Huawei’s 5G kit in less time.
Hopes on the part of government that this decision may put the Huawei issue to bed may be optimistic.
The reason that we are here again despite a decision in January is because one of the key players – the US – played a new card in the form of sanctions.
And there is still time between now and legislation coming to parliament in Autumn for others to do the same – whether Conservative backbenchers or Beijing.
In the long run, many countries will be watching carefully how China reacts.
Will it feel it needs to punish the UK in order to discourage others from following its lead on 5G? Or will it want to avoid being seen as a bully and prefer to try and influence the decision more subtly? Whatever the case, the Huawei story in the UK is not over yet.
Chairman resigns
Huawei says it employs about 1,600 people in the UK and claims to be one of Britain’s largest sources of investment from China.
The firm – whose shares are not publicly traded – does not provide a regional breakdown of its earnings. But on Monday, it announced a 13% rise in sales for the first half of 2020 compared to the same period in 2019, totalling 454bn yuan ($64.8bn; £51.3bn).
The UK will have accounted for a fraction of that. The firm’s UK chief recently noted that Huawei had only deployed a total of 20,000 5G base stations – the radio receiver/transmitter equipment fitted to a mast – in the UK so far. By contrast it expects to deliver a total of 500,000 globally this year.
Even so, what the firm fears and Washington hopes is that other countries will now follow Westminster’s lead with bans of their own.
Despite there seeming little chance of a U-turn, Huawei said it was still urging UK ministers to reconsider.
“We will conduct a detailed review of what today’s announcement means for our business here and will work with the UK government to explain how we can continue to contribute to a better connected Britain,” spokesman Ed Brewster said.
Shortly before the announcement Sky News revealed that Lord Browne, Huawei’s UK chairman and the ex-chief executive of BP, would be leaving the Chinese company before his term had expired. It said he had given his notice a few days ago and would formally step down in September.
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Lord Browne is stepping down six months before his time at Huawei was due to end
Lord Browne had led efforts to improve the company’s image in the UK and had tried to prevent a ban.
“He has been central to our commitment here dating back 20 years, and we thank him for his valuable contribution,” said Huawei, confirming the report.
Industry reaction
BT is set to be the telecoms operator most affected by the decision given it runs both the EE mobile network and Openreach, which provides fixed-line infrastructure to individual internet providers.
“We need to further analyse the details and implications of this decision before taking a view of potential costs and impacts,” it said.
The move should, however, benefit Nokia and Ericsson, which are the two other main 5G kit vendors.
“We have the capacity and expertise to replace all of the Huawei equipment in the UK’s networks at scale and speed… with minimal impact on the people using our customers’ networks,” said Nokia.
Ericsson added: “Today’s decision removes the uncertainty that was slowing down investment decisions around the deployment of 5G in the UK… and we stand ready to work with the UK operators to meet their timetable.”
However, both firms manufacture some of their 5G equipment in China, which has also caused concern in Washington.
In June, the US Department of Defense published a list of 20 companies it claimed had close ties to the Chinese military.
It included Panda Electronics – the firm with which Ericsson jointly runs a manufacturing facility in the Chinese city of Nanjing.
“A lot of companies assemble equipment or have some type of manufacturing in China,” Ericsson’s head of corporate communications Peter Olofsson told the BBC, when asked about this.
“Our trade compliance people have looked at this [list] and they concluded that it’s not something that has an impact on Ericsson or our operations.”
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Virgin Atlantic saw passenger numbers slump as countries closed borders and brought in travel bans
Troubled airline Virgin Atlantic has finalised a rescue deal worth £1.2bn.
The package includes support from its main shareholder, Virgin Group, and loans from outside investors.
It also includes deferring hundreds of millions of pounds owed both to Virgin Group and to fellow shareholder Delta Air Lines.
Virgin Atlantic had initially hoped to obtain emergency funding from the government, but ministers said any subsidies would be a last resort.
The funding comes largely from existing shareholders and a new investor, hedge fund Davidson Kempner Capital Management.
The company said the plan paved the way for the airline to rebuild its balance sheet and return to profitability in 2022.
The Covid-19 outbreak plunged Virgin Atlantic into an acute crisis.
Like other airlines, it was forced to ground most of its fleet for months and is not due to resume services until next week.
The company had initially hoped the government would step in, but ministers made it clear taxpayers’ money could only be considered once all other options had been exhausted.
Under the package announced on Tuesday, the airline will receive loans worth £170m from Davidson Kempner, while Virgin Group, its biggest shareholder, will put in a further £200m.
Both Virgin Group and its fellow shareholder Delta Air Lines will defer payment of money owed to them by the airline worth £400m. Other creditors are expected to defer payments worth £450m.
The plan will still require formal approval from Virgin Atlantic’s creditors under a court-sanctioned process.
The airline said more than 3,500 jobs had been lost as part of a cost-cutting drive that included the closure of its base at London Gatwick.
Virgin Atlantic calls this a “solvent recapitalisation”. But the question is, will it be enough to secure the company’s long-term future?
There is some new money here – an extra £200m in cash from the Virgin Group and loans worth £170m from Davidson Kempner. But a large part of the package is made up of deferring or waiving existing liabilities.
This was probably the best the company could do in the circumstances, after the government made it clear targeted state aid would only be considered as a last resort, after private-sector options had been exhausted.
But it doesn’t seem to give the company much of a war chest to absorb future shocks. It is due to resume flights next week – and managers will be desperate for demand to pick up, and quickly.
Virgin Atlantic has already taken drastic action to cut costs, shedding more than 3,500 staff and closing its base at London Gatwick. There’s no doubt it will be a much leaner operation in future.
This deal does at least keep the airline flying, but navigating its way through the stormy skies facing the industry for the foreseeable future will still be a huge challenge.
The UK faces more taxes rises and spending cuts to stop its debt pile getting out of control, the country’s spending watchdog has warned.
The Office for Budget Responsibility (OBR) said the economy was on course to shrink by 12.4% in 2020, with borrowing set to rise to a peacetime high.
This would mark the biggest economic decline in 300 years.
Official data showed the economy grew by 1.8% in May, a month after suffering the biggest contraction on record.
The OBR said the coronavirus pandemic had “materially altered” the outlook for the public finances.
It said the government would need to re-impose austerity measures to fix some of the permanent damage caused by the crisis.
Without more tax rises or spending cuts, the UK’s debt share would dwarf the size of the economy, growing to more than 400% of gross domestic product (GDP) in 50 years time.
Its Fiscal Sustainability Report said: “In almost any conceivable world there would be a need at some point to raise tax revenues and/or reduce spending (as a share of national income) to put the public finances on a sustainable path.”
‘Smaller economy’
It warned that economy would not get back to its pre-crisis size until the end of 2022, while unemployment was likely to rise to a record 12% by the end of this year, falling back to 10.1% in 2021.
It said the government was on course to borrow £322bn this year to pay for the shortfall between tax revenues and public spending.
This will push Britain’s debt share to 104.1% of GDP.
What is GDP and why does it matter?
Coronavirus: How much will it cost the UK?
The OBR’s central projection assumes a slower recovery than the watchdog outlined in April, with a coronavirus vaccine found in about a year.
They also do not include the chancellor’s £30bn package unveiled last week to protect jobs and boost the economy.
The watchdog said an “early vaccine or effective treatment would allow most activities to resume much as they were before the virus”, allowing the economy to recover more quickly, with no “enduring economic scarring”.
However, the OBR’s most pessimistic scenario, where no vaccine is found and social distancing measures continue “indefinitely”, would lead to a “significant” loss of business investment.
Image copyright Getty Images
In this worst case scenario, unemployment would rise to four million, up from 1.3 million in 2019, while the UK’s high streets would be left permanently scarred as shoppers stay away.
“The virus is likely to have significant effects on people’s expectations and behaviour”, the OBR said.
It added that a “substantial rise in business indebtedness” would “weigh on investment and innovation and to result in more business insolvencies”.
As coronavirus has battered the UK economy, a raft of businesses have announced closures and thousands of workers are set to lose their jobs.
This is despite the government having pumped billions of pounds into schemes to support workers’ wages and loan guarantees for business.
The UK’s economy shrank by 19.1% in the three months to May, as the full impact of lockdown was felt, the Office for National Statistics has said.
The economy actually grew by 1.8% in May, but this was not enough to make up for the fall of 6.9% in March and the record 20.4% decline in April.
Manufacturing and house building showed signs of recovery in May as some businesses saw staff return to work.
Despite this, most of the economy was “in the doldrums”, the ONS said.
“The economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
“In the important services sector, we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”
Mr Athow told the BBC’s Today programme that there could be signs of improvement in next month’s release of figures.
“Some of the survey data we’re seeing suggests that as more of the economy reopened and as some of the restrictions were eased, we did see stronger performance in June, but it’s really early,” he said.
“You’ve got one month of firm data and some indicators suggesting June might be stronger, but there’s a long road to go here and we’re still trying to figure out what the best data is to understand the overall picture.”
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Media caption‘We need a date to restart so we can save our staff’
May’s modest month-on-month expansion was less than the 5% or so that economists had expected.
It came as sectors such as manufacturing, construction, DIY retailers and garden centres were allowed to reopen.
Manufacturing grew by more than 8% during the month, as did construction.
What is GDP?
Gross domestic product (GDP) is the sum (measured in pounds) of the value of goods and services produced in the economy.
But the measurement most people focus on is the percentage change – the growth of the country’s economy over a period of time, typically a quarter (three months) or a year. It’s been used since the 1940s.
It’s the main way of determining the health of the UK economy.
What is GDP and why does it matter?
“Today’s figures underline the scale of the challenge we face,” said Chancellor Rishi Sunak.
“I know people are worried about the security of their jobs and incomes. That’s why I set out our Plan for Jobs last week, following the PM’s new deal for Britain, to protect, support and create jobs as we safely reopen our economy.
“Our clear plan invests up to £30bn in significant and targeted support to put people’s livelihoods at the centre of our national renewal as we emerge through the other side of this crisis.”
A quarter of the economy’s output was lost under lockdown in March and April, and May’s figures show even firms who are back in business may be struggling to get on track.
It’s one thing being allowed to open the doors again (and some firms remain mothballed); another to be confident you can do so safely. And then there’s the biggest hurdle of all; ensuring customers are willing and able to spend again.
As job losses mount, it clear that even some firms who qualify for government help, are faltering. Some won’t have made it as far.
The Bank of England’s own chief economist is among those who’ve voiced hopes for a “V-shaped” recovery; a swift and full bounce back in activity.
But history tells us that economies can take years to make up lost ground after a slump. The blow from this crisis was felt within days; convalescence may be tougher. And in the meantime, the livelihoods of many may feel the strain.
The British Chambers of Commerce said May’s “modest rally” in economic growth did little to alter “the UK’s historically downbeat growth trajectory”.
“The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen rather than evidence of a genuine recovery,” said the BCC’s head of economics, Suren Thiru.
“While UK economic output may grow further in the short term as restrictions ease, this may dissipate as the economic scarring caused by the pandemic starts to bite, particularly as government support winds down.”
Thomas Pugh, UK economist at Capital Economics, said the data showed the recovery was “maybe not so V-shaped after all” – a reference to remarks last month by Bank of England economist Andy Haldane, who said the UK was on track for a quick recovery.
He said May’s figure was “a disappointing first step on the road to recovery” and suggested that “hopes of a rapid rebound from the lockdown are wide of the mark”.
“Indeed, the path to full economic recovery will probably be much longer than most people anticipate,” he added.
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Singapore’s economy plunged into recession in the last quarter as an extended lockdown hit businesses and retail spending.
Economic growth in the city state shrank by 41.2% compared to the previous quarter, the country’s biggest contraction on record.
Authorities forecast it will be Singapore’s worst recession since independence from Britain in 1965.
The figures reveal the severity of the virus-driven downturn faced globally.
Official data showed Singapore’s second quarter gross domestic product (GDP) shrank 12.6% on a year-on-year basis.
As one of first countries to release growth data for the period in which many economies were in lockdown, the numbers from Singapore provide a glimpse of how the ongoing pandemic could affect economies around the world.
The worse-than-expected figures followed a first quarter year-on-year GDP fall of 2.2% and quarter-on-quarter drop of 10.6%.
The deepening downturn also indicates that the pandemic may have impacted Singapore’s economy harder than many of its Asian counterparts.
The slump in global trade has hit the country’s export-reliant manufacturers, while the construction industry activity stalled and retailers have seen sales fall at a record pace.
In contrast Japan’s GDP is seen shrinking by around 20% in the second quarter from the previous three months, while data this week may show that the Chinese economy has now returned to growth.
The data out of Singapore puts more pressure on the country’s ruling People’s Action Party, which last week saw its weakest general election performance since independence 55 years ago.
The government has already pledged about $67bn (£53bn), or nearly 20% of Singapore’s GDP, in stimulus measures to support struggling businesses and households.
Singapore started to ease its lockdown measures, known as the Circuit Breaker locally, on 1 June.
The city state entered phase two of reopening its economy on 19 June, which allows most shops and restaurants to resume business although social distancing rules remain in place.
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Professional gamer Reia Ayunan takes part in multiplayer role-playing games like Battle Royale
The number of females playing video games in Asia is growing at a faster rate than their male rivals, according to the latest research.
Women are levelling the playing field across all of Asia’s key markets including China, India and Japan.
The female video gaming community grew by 19% last year, according to data commissioned by Google.
Asia is regarded as the global capital of video games, accounting for 48% of the world’s total gaming revenue.
“Among the millions of female gamers joining the ranks every year, females have been a huge catalyst for growth,” said Rohini Bhushan, at Google Asia Pacific.
There are a number of factors that are contributing to this rise, with storylines becoming more inclusive and connectivity improving across the region.
For 2019, the numbers of female gamers had grown to 38% of the 1.33bn global gaming population, according to Google which collaborated with market researchers Niko Partners.
But for Asia, the proportion of female gamers is much higher. In China, they now account for 45%, while for South Korea, Japan and Southeast Asia the figure is 40%.
Money spinners
The region has seen particularly strong growth in gamers using mobile phones.
“More and more female gamers are drawn to the fun, flexibility and freedom that mobile gaming affords. This is especially the case in Asia, where mobiles are the primary internet-enabled device for many people,” said Matt Brocklehurst, head of apps, partnerships and platform marketing, Google Asia Pacific.
Gaming has become extremely lucrative, not just for companies like EA and Activision Blizzard who make the games, but also for the best players in e-sports – competitive online gaming.
Top female e-sport players have earned upwards of $20m (£16m) through a combination of sponsorship, prize money and endorsements.
Image copyright Amanda Lim
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Singapore-based professional gamer Amanda Lim plays for an all-female team called We.Baeters
They are now seen as key influencers with millions of followers who watch them play online via live-streaming.
In Asia, entire teams and leagues made up of female gamers are now making an impact on the world stage, including the Female Esports League, which organises events for teams across Southeast Asia.
Professional gamer Amanda Lim, 25, got into online video games as a way to bond with her brother and uncle. “That’s when I fell in love with gaming. Female gamers are less well-known but I think in time that will change as more of us start playing. We can be as strong as males.”
Ms Lim plays for an all-female team called We.Baeters, who are spread across Malaysia and Singapore.
‘Not the target demographic’
Ex-professional gamer, Reia Ayunan, typically played massive multiplayer online role-playing games (MMORPG) such as Battle Royale for around six hours a day.
Her live stream was made up of viewers from the Philippines, Malaysia and Indonesia.
She has noticed more female players live-streaming online. “While there are some leagues working towards equality in the pro scene, society still assumes that women/girls don’t like playing video games, therefore we’re not the target demographic of the gaming industry.”
As a professional gamer she was earning SG$4,000 (£2,300; $2,800) a month, mostly from sponsors. She was recently hired by video game creator Ubisoft and now produces game content aimed at attracting more females.
Image copyright Valerie Ong
Image caption
Valerie Ong plays video games for several hours a day
Student Valerie Ong, 19, lives in Singapore and plays between three and seven hours a day, depending on if she is at school or on a term break.
She started playing Call of Duty (CoD) after she went to support her best friend at a national competition earlier this year. “It was a real eye-opener as it was heavily male-dominated and my friend was actually the only girl that competed.
“It was really cool and inspirational to watch her play as she could outplay many of her opponents and actually carried her team in many matches.”
The social aspect also appeals to Valerie as gamers can play with others from across the world. “I play with other people online which makes it super fun as we can joke around with one another while playing,” she added.
Unfortunately, there is a dark side to the rise of females gamers as many have been harassed online. “I was turned into memes and even was a victim of sexual harassment online. Once you go public and you get noticed there will always be people hating on you, finding faults and mistakes. The gaming community can be very toxic,” added Ms Ayunan.
Experts advise choosing a username that doesn’t include your real name or other identifying information when creating accounts and profiles.
The Nationwide will lower the minimum deposit it requires from first-time buyers to 10% from 20 July.
The UK’s largest building society had restricted its mortgages in June in response to the coronavirus crisis.
But Henry Jordan, director of mortgages, said “we feel it is the right time to enhance our lending”.
It follows the government’s announcement of a temporary stamp duty holiday for people in England and Northern Ireland.
Homebuyers will pay no stamp duty on the first £500,000 of their purchase under the tax break, which will last until 31 March.
Amid signs that the UK housing market is picking up, the Nationwide will offer an unlimited number of 90% loan-to-value mortgages to first-time buyers.
Since June, only customers with 15% deposit had been able to apply for mortgages with the firm.
So, for example, if a property costs £100,000, a new buyer would now need a £10,000 deposit rather than a £15,000 deposit.
‘Breathing life’ into the market
Henry Jordan, director of mortgages at Nationwide Building Society, said: “First-time buyers are vital to breathing life into the housing market and economy. We understand one of the biggest barriers to home ownership is raising a deposit.”
He added: “While we will continue to monitor the market carefully, we feel it is the right time to enhance our lending, initially to those looking for their first home. We welcome the government’s announcement on stamp duty and hope our combined changes create a positive impact on a market that, despite being in relatively good health, is still recovering.”
The new mortgages on offer will only be available for buying houses which are at least two years old. The maximum mortgage term will be 25 years.
UK house prices ‘in first annual fall for eight years’
Stamp duty holiday: How will it work?
The choice of low deposit mortgages has been particularly badly hit during the coronavirus crisis.
In March, there were 779 mortgage deals for borrowers with a 10% deposit. By the start of July there were just 70 products available, according to analysis from financial information website moneyfacts.co.uk.
Miles Shipside, commercial director at Rightmove, seemed hopeful that the housing market should start to recover in the coming months.
“There’s been record demand for property on Rightmove since the market reopened which has been boosted even further by the stamp duty announcement, all of which should help activity levels over the coming months,” he said.
According to the Nationwide, UK house prices were 0.1% lower in June than the same month a year ago – the first annual fall since December 2012.
Sales plummeted and viewings halted when the sector was effectively frozen under lockdown.
Potential changes to travel insurance and passport rules for UK holidaymakers after Brexit are being highlighted in a series of adverts starting this week.
The government’s “UK’s new start: let’s get going” campaign will be run on TV, radio, online, print and billboards.
There will be advice for Britons in the EU and EU citizens living in the UK, as well as UK and EU businesses, on how to prepare for the end of the transition period on 31 December.
People will also receive text messages.
On Monday the government also published a model setting out how the border with the EU would operate after the transition.
Ministers say most of the actions that citizens and businesses are being asked to take will need to be completed regardless of the ongoing negotiations between the UK and EU on the post-Brexit trade arrangements.
That is because the UK will no longer be part of the single market and current customs union at the end of the year, no matter what arrangements are put in place.
The government says the actions people need to take after 1 January 2021 will vary depending on individual circumstances but the adverts will cover advice suggesting that:
Britons intending to travel to Europe should ensure their passports are valid for a specific period, they have comprehensive travel insurance, and they check their mobile phone roaming policy
people travelling to Europe from the UK with pets should contact a vet at least four months before their trip
businesses planning to export or import to or from the EU should ensure they have registered with the relevant customs authority
The adverts will advise people to “Check, Change, Go” and recommend using a checker tool on the government’s website.
Will the EHIC still be valid after Brexit?
We’ve already left the EU but we’ve been in the departure lounge, the transition period, when the status quo is pretty much held.
That is going to run out at the end of December, when we will leave the single market and the customs union.
That means big changes for business and a lot of them are frustrated that it isn’t clear enough what that new world would look like.
There are also likely changes for all of us too. Your mobile phone bills might be pretty different next year if you escape somewhere in Europe on holiday, and message your friends from the beach.
The EU health card that has given people insurance wouldn’t apply anymore, so we need to make different arrangements about that.
There are particular tensions for Northern Ireland, which of course will be part of the UK customs territory, but will still follow some EU customs law and regulation on goods to avoid a hard border.
There could be real disruption there if laws on the different sides of the channel diverged over the years.
And there is an overall concern in government too, as we saw from a leaked letter from the International Trade Secretary Liz Truss, that the government just isn’t quite ready for all of this, let alone the population and businesses who will have to grapple with the changes on the ground.
Image copyright PA Media
Image caption
The adverts will appear on TV, radio and online – as well as billboards
Cabinet Office Minister Michael Gove said the end of the transition period will “bring changes and significant opportunities for which we all need to prepare”.
“While we have already made great progress in getting ready for this moment, there are actions that businesses and citizens must take now to ensure we are ready to hit the ground running as a fully independent United Kingdom.”
However, the Cabinet Office says some of the UK-wide guidance will not apply to trade between Northern Ireland and the EU until the negotiations have concluded. A special trade arrangement involving Northern Ireland was agreed as part of the Brexit transition deal.
The campaign comes after the government announced a £705m funding package to help manage Britain’s borders after Brexit – measures Labour said were “too little, too late” and showed that ministers were unprepared.
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Media captionMichael Gove announces a new public information campaign and an “operating model for the border”.
In a statement to the House of Commons, Mr Gove set out details of a new border operating model that would be phased in between January and July 2021.
From January, traders importing standard goods, such as clothes and electronics, will need to prepare for basic customs requirements.
By July, traders moving any goods will have to make full customs declarations at the point of importation and pay relevant tariffs.
HMRC estimates that the new system will see a 215 million rise in the number of customs declarations.
It is understood that the government expects to build 10 to 12 inland border posts, in order to check traders are complying with customs rules.
Brexit: What do businesses need to prepare for?
Mr Gove told MPs that the model would help the UK on its way to having “the world’s most effective border by 2025”.
But Labour’s Rachel Reeves accused the government of “wrapping business in red tape and sending them to a supersize lorry park in Dover”.
“The best way to help all businesses to prepare is to agree a deal with EU on the terms we were told to expect – that means no fees, charges, tariffs or quantitative restrictions across all sectors.
“It does not mean customs, physical checks and export declarations.”
Johnnie Walker, the whisky which traces its roots back 200 years, will soon be available in paper bottles.
Diageo, the drinks giant that owns the brand, said it plans to run a trial of the new environmentally-friendly packaging from next year.
While most Johnnie Walker is sold in glass bottles, the firm is looking for ways of using less plastic across its brands.
Making bottles from glass also consumes energy and creates carbon emissions.
To make the bottles, Diageo will co-launch a firm called Pulpex, which will also produce packaging for the likes of Unilever and PepsiCo.
Diageo’s paper whisky bottle, which will be trialled in spring 2021, will be made from wood pulp and will be fully recyclable, the company said.
The idea is that customers would be able to drop them straight into the recycling.
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Drinks companies have been developing paper bottles to try to cut down on pollution and make products more sustainable.
Carlsberg in the process of developing a paper beer bottle.
UK firm Frugalpac produces paper wine bottles which it says are made from recycled paper with a “food grade liner”.
However, drinks giant Coca-Cola in January said it would not ditch single-use plastic bottles because consumers still want them.
Plastic-free
Diageo said its bottles will be made by pressurising pulp in moulds which will then be cured in microwave ovens.
The bottles will be sprayed internally with coatings that are designed not to interact with the drinks they will contain.
Many cartons made out of paper have a plastic coating inside to stop the drinks leaking out. Diageo, however, said its drinks bottles will not have that plastic coating.
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Some major food and drinks producers are trying to cut down on plastic pollution
Companies are coming under increasing pressure to reduce the amount of plastic in packaging as consumers increasingly focus on damage to ecosystems.
In Europe, 8.2 million tonnes of plastic were used to package food and drink in 2018, according to ING analysts.
Diageo, which also makes Guinness and Smirnoff vodka, said it uses less than 5% of plastic in its total packaging.
However, while glass bottle manufacturers are striving to make production more efficient, they still have a significant carbon footprint.
It takes a lot of energy to power glass furnaces, many of which use natural gas to melt raw materials such as sand and limestone.
