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Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet
Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet

Archive for February, 2019

While Brexit rumbles on, WA is welcomed into new home

Last night, we marked the next milestone in our development – moving in to our new offices at Artillery House in Victoria. WA is cementing itself as the consultancy of choice for organisations with complex reputational, policy and regulatory issues, and has experience sustained year-on-year growth and our new office is the latest sign of this success.

To celebrate WA’s expansion, we invited George Parker, Political Editor at the Financial Times, to give his insights on the latest Brexit developments, based on his three decades of experience at the heart of UK and EU politics.

Clients, senior business executives, policy specialists and Westminster insiders joined us for our first party in our new office to catch up over wine and canapés and to meet many of our exciting new team members.

“The crystal ball is hazy”

As Brexit draws nearer, George gave us an insight into his thinking on the big question of the day. While many aspects of the process remain uncertain, despite being only 50 days until Brexit day, many in the room agreed an extension of Article 50 is likely regardless of the deal passing or not.

While there is seeming lack of progress, George told us he believes there is life in Theresa May’s deal yet. The DUP seems to be more open to working with government than they have been recently as the prospect of no-Brexit looms. Similarly, the ERG fears a substantial delay or no Brexit at all and are also softening their position to a certain extent. Whilst they are warming to the idea of a tweaked May deal, in private discussions the threats of pulling support from government if May softens her stance on Brexit in a more Europhile direction very much remain.

On Labour, while sections of the party and its leadership are becoming less hostile to working with May and supporting her deal (as outlined in Corbyn’s letter spelling out Labour’s five Brexit asks), George was clear this would still take time. He set out how Corbyn and his top team, supported by union boss Len McCluskey, are slowly creating a permissive environment to enable the “Great British compromise” that Richard Burgeon, Shadow Justice Secretary, has teased.

Whilst the competing Brexit groups and positions seem to be dynamic and uncertain, with government policy today resembling something nobody could have envisaged three years ago, there remains the prospect of a last-minute deal. With the clock ticking, George highlighted how EU negotiations often go to the wire, so there may be space for May’s deal to scramble over the line.

There are two main set-piece events to watch going forward. The EU-League of Arab States summit in Sharm El-Sheikh later this month, which May is likely to attend, is an opportunity for further progress or concessions on both sides as all EU heads of states will be at the event. Leaders are also set to convene at the European Council on 21-22 March, if any last-minute agreements are to take place, this is likely where they will happen.

So, whilst the crystal ball is hazy and Brexit continues to surprise us all, there remain avenues for a Brexit deal with sufficient support to be cobbled together.

Thank you to all who joined us last night and to George for his excellent commentary on such a complex subject. We’re incredibly excited about the year ahead and look forward to hosting many more events throughout the year as we settle into our new home and share our ongoing success. Stay tuned!

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WA shortlisted for PR Moment Awards

WA is delighted to have been shortlisted for Independent Agency of the Year in the PR Moment Awards 2019.

The PR Moment Awards are a major fixture in the UK PR and communications calendar and are judged by eminent industry professionals. The awards celebrate excellence and recognise and reward exceptional campaigns and talent in the UK PR and communications sector.

As a company, WA has had a truly outstanding 12 months. We’ve moved to new offices, won exciting new clients, and bolstered our team with new talent, whilst continuing to deliver innovative and creative strategies for existing clients.

Our strong work ethic, commitment to collaboration and real understanding of each of our clients’ businesses mean that we can deliver exemplary public affairs advice on policymaker engagement, corporate communications, crisis management and political risk time and time again.

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Is crown use licensing a loaded threat for pharma?

The battle between NHS England and American pharmaceutical company Vertex over the cost of the revolutionary cystic fibrosis drug, Orkambi, rages on.

In the latest development, campaign groups are upping the ante, backed in Parliament by Conservative MP Bill Wiggin, by calling for the government to invoke Crown use licensing. This would take the patent for Orkambi from Vertex, allowing it to be manufactured at a lower cost as a generic medicine. Earlier this week, Shadow Health Secretary Jonathan Ashworth took up the mantle, backing the call for the patent to be removed in a direct-to-camera message to Vertex on the BBC’s Victoria Derbyshire Show.

How likely is it that this will happen? In short, not very.

The suggestion to strip a company of its exclusive patent is highly controversial. Crown use licensing has only been used in very rare occasions, such as in cases of emergencies where a patent was not available at all in the UK. It has not been used as a tool to take a drug from a company simply to supply a medicine for a cheaper rate.

While it may feel like a quick fix, it is probable that the process would be very drawn out. The government would have to compensate Vertex, legal battles would likely ensue, and it could take several years before a generic manufacturer would be able to produce the medicine.

Vertex, who have several pipeline drugs for cystic fibrosis, argue that the price of Orkambi is a return on investment for years of ongoing research and development in this sector. Stripping them of the ability to sell profitably in the United Kingdom would, they argue, be highly detrimental to cystic fibrosis patients in the long run who would not benefit from this or future innovative new medicines.

For the wider sector (who are watching the standoff closely), such a bold more would be highly provocative. It would be a damning signal to industry, who already see the UK as a relatively small market on a global scale and could risk the UK’s position as an attractive launch market. Companies may increasingly turn to markets, such as Germany, for their technology appraisal processes and launch. In short, Crown use licensing could lead many to reassess their relationship and ongoing commitment to the UK.

As a single payer, the NHS has negotiated preferential rates for decades, and it is feasible that industry would start to see the UK as a less influential and more volatile market, particularly given the existing pressures created by Brexit.

Invoking crown use licensing would, to put it briefly, appear to directly contradict the sentiment of the Accelerated Access Review and the Life Sciences Sector Deal, both of which promised faster access to innovative treatments.

Who will blink first? It is not clear. But as Vertex gears up to appear in front of the Health and Social Care Select Committee, there is little doubt that tensions need to cool if progress is going to be made.

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The politics of change?

The term historic is becoming commonplace in relation to UK politics in recent times but the formation of a new Independent Group of 11 MPs, eight from Labour and three former Conservatives, does represent a very significant moment. Nothing quite like it has been seen since the formation of the Social Democratic Party in 1981. The spectacle of formally loyal MPs from the two main parties holding press conferences deploring the state of their respective political tribes has been dramatic and has rightly captured the news agenda.

This development poses many new questions that organisations seeking to engage with and influence the political sphere in the UK must quickly consider. Just how significant and long lasting is this split? How will it impact, if at all, the current political impasse over Brexit? Should you prioritise engagement with the new grouping? Does this make an earlier election more likely? How damaging is this for both Labour and the Conservatives moving forward?

Many of these questions will take time to address, but there are some factors that are immediately apparent. In some ways, this splintering is simply a formalisation of trends that have been obvious for some time: that on many big issues (particularly Brexit) there are a significant number of MPs that were no longer voting along party lines; that Corbyn’s leadership of the Labour Party has made it essentially uninhabitable for many moderate Labour MPs; and that Theresa May’s approach to Brexit has fundamentally alienated the most ardent remainers in her party.

How much influence this grouping will be able to exert on the Brexit process will depend on how organised and disciplined they are and the extent to which they are able to coordinate with the Liberal Democrats and SNP. This does not fundamentally change the parliamentary arithmetic on Brexit, but it does change the political dynamics at play. Theresa May and Jeremy Corbyn will both need to factor in the possibility of further defections when plotting their Brexit course.

The longer-term prospects for this new Independent Group are hard to predict. UK political history does not include very encouraging precedents and the first past the post electoral system will always present significant hurdles to any new political party. They are not yet technically constituted as a political party and have no electoral or administrative infrastructure. To have any chance of having an electoral impact at a general election they will need to address this, as well as build an entirely new policy platform from the ground up. They will need to define what they stand for and what they want to achieve, not just what they didn’t like about their former parties.

In seeking to start this process there are likely to be opportunities for business and investors to engage and shape their thinking. The grouping includes a former Cabinet level Business Minister, a former Shadow Business Secretary, and the Chair of the Health Select Committee and is characterised by MPs who understand the importance of supporting business and the UK economy. They will have the ability to command media attention and should definitely be a major feature in political engagement programmes from now on.

Finally, this leaves both Labour and the Conservatives wounded. There will be intense scrutiny in the coming days and weeks on other potential defectors with the reaction from both main party leaderships set to play a crucial role in what happens next. Failure to address the fundamental concerns aired about the direction of travel could see more defections. But many MPs will be making longer term calculations. The electoral prospects of a brand new political force in UK politics are very uncertain.

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What does no deal risk losing in the NHS Long Term Plan?

In launching the NHS Long Term Plan, Theresa May promised stability amidst all the instability. Key headlines include half a million lives over the next ten years to be saved through preventing diseases such as strokes and heart disease, and true efforts to bring parity to mental and physical health.

But with fears increasing that Theresa May is ‘thinking the unthinkable’ and seriously considering a no-deal Brexit, key policies within the Plan could be at risk before they’ve even begun. Here, we focus on four areas underpinning the Plan that are at risk from a no-deal Brexit:

  1. The money behind the Plan

Before the Plan came the financial commitment: £20.5 billion more for the NHS over the next five years.

But as Bank of England Chair Mark Carney said last week, “A no-deal would be an economic shock for this country.” The UK economy expanded in 2018 at its slowest annual rate in six years, and a no-deal Brexit could continue, or even worsen this. Under World Trade Organisation Tariffs, the UK could have more expensive imports, less demand for exports and potentially cause a greater reticence from the government to borrow at what will inevitably be higher rates.

Simply put, no-deal is likely to give the Treasury less spending power and flexibility.

Due to a fortunately timed windfall from higher than expected tax income, the Plan’s funding is supposed to be guaranteed. But any major hit to Treasury revenue could mean that the designated budget must be drawn from elsewhere. It will have to be raised through increased taxation, borrowed, or moved from other departmental budgets – highly contentious when other public services will inevitably have to undergo (further) cuts.

  1. Relieving pressure on hospitals by increasing care in community settings

A major pillar of the Plan is for more patients to receive care in primary and community settings, rather than in hospitals. This has been a longstanding ambition of this and previous governments but has been notoriously hard to deliver.

An extra £4.5 billion a year has been ringfenced for the increase in primary care capacity and shift to a more integrated approach. But reducing hospital care also relies on effective and complementary social care services, the often-ignored, yet critical part of the puzzle. As Simon Stevens has reiterated many times, a failure to deliver on social care will lead to a failure to achieve on the Long Term Plan.

Yet the long-awaited social care green paper has been delayed because of Brexit. Current thought is that it will land in April. But a no-deal will inevitably change the scope once again or even delay the Green Paper indefinitely.

Ideas rumoured to be considered for inclusion, such as tax incentives for young people to save for their social care, will have to be reconsidered against what will be politically palatable and financially necessary following a hard Brexit. With this further delay, the risks grow that social care reform will once again be kicked down the road.

  1. Increasing the NHS workforce

There has already been plenty of criticism at the Plan’s lack of focus on workforce, which is understandably seen as a critical tenet of its successful delivery.

The BMA has repeatedly highlighted the risks of the high level of vacancies in the NHS’s workforce. Ruth May, NHS England’s new Chief Nursing Officer, reiterated the point in her first interview. For a sector already struggling to cope, a no-deal exit would make this challenge even more acute.

At almost 70,000 individuals, the current number of EU nationals working in the NHS is staggering. Any reduction in this number would hit services hard, and undoubtedly reduce the ability to deliver appropriate, and necessary levels of care.

Under pressure from NHS leaders, a workaround has been agreed. In the event of a no-deal, EU citizens coming to the UK will be permitted ‘temporary leave to remain’, giving them the same rights they have now.

But note the ‘temporary’ aspect, which is crucial. It grants permission to stay for just three years and with no extension ability. Applying for Indefinite Leave to Remain or a Tier 2 Visa are the only other routes, undoubtedly acting as a deterrent to many.

Even if a deal is agreed, the workforce questions are likely to remain. All eyes are on the Workforce Implementation Plan proposals, expected in early April, and the eventual full Plan within two months of the Comprehensive Spending Review.

  1. Improving outcomes for all major conditions

While improving outcomes for major conditions relies on multiple, complex factors, a key factor is to ensure patients receive the right care at the right time.

This necessitates uninterrupted access to treatments and therapies. The Department of Health and Social Care (DHSC) and NHS England have been keen to reassure the public that there will be no interruption to medical supply, no matter the exit scenario. Huge sums have been spent testing scenarios and creating contingencies by industry and government to ensure continued access to medicines. But questions remain over the ability to maintain supplies in a volatile, hard Brexit scenario.

Diabetes UK and JDRF last week published a joint statement calling on the Government to provide more detail on access to insulin in the event of a no-deal. And today, HSJ has a splash from the Royal College of Radiotherapists, saying that if a no-deal Brexit delays the import of radioisotopes NHS trusts will have to prioritise which patients receive cancer treatment, meaning some cancer treatments may be delayed.

While the necessary customs forms and transport arrangements will undoubtedly be prioritised and agreed relatively swiftly, this is unchartered territory and a no-deal Brexit will test the preparedness to the limit. The potential impact on patients in the meantime is highly concerning.

The Long Term Plan has been one of the few glimmers of domestic policy success for Theresa May’s battered government. While considered challenging to deliver, there is optimism in and across the health sector that progress can be made. However, there are growing concerns that a no-deal Brexit risks destabilising many of the Plan’s core ambitions, potentially undermining it from the offset. Providing stability amongst the instability may not be straightforward after all.

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WA named a finalist in 2019 Private Equity Awards

WA Investor Services have been shortlisted for the Specialist Adviser of the Year category in the 2019 Private Equity Awards.

The prestigious Private Equity Awards recognise the best practitioners and advisers in the industry, with a rigorous shortlisting process conducted by a panel of leading industry experts.

The Specialist Adviser of the Year award is bestowed upon advisers that offer unmatched insight and value for clients.

Investors look to WA Investor Services for in-depth and nuanced analysis of the political and regulatory risks impacting their decisions. We help our clients understand risks, forecast and scenario plan, and provide ongoing intelligence gathering to track issues.

Our work over the past 12 months has ranged across a diverse span of topics from the macro to the technical. From the implications of a potential Corbyn government and the different scenarios for immigration and trade post-Brexit; to energy contracts for difference, recycling policy, and the funding envelope for social and foster care.

As cross-border issues play an increasing role in determining risks, we have also expanded our international political due diligence offer. Last year we carried out policy risk analysis for deals covering markets as diverse as Eastern Europe, North America, Australia, Asia and the Middle East.

The awards ceremony will take place on 24 April at the London Hilton, Park Lane

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Driverless but not rudderless? The self-driving Department for Transport

Chris Grayling is having a rough old time of it. He has listed from bad headlines to calls for his resignation over the fluffed Brexit ferry contract, faced ire over pricier rail tickets that annually signal the end of the Christmas holidays, and had his past dragged up over the collapse of his flagship probation reforms made as Justice Secretary. And it doesn’t seem it will get any less difficult in the short or longer term. DfT is scrambling to modernise the entire transport infrastructure – in physical, political and regulatory terms – for the 21st century. This is not the easiest of challenges anyway but must be particularly irksome for a distracted department led by an embattled Secretary of State.

Perhaps a symptom of DfT’s eagerness to address questions about the future of transportation in the UK is the flurry of recent consultations from the Department. Four separate consultations have been issued over the past three weeks, with one in particular causing a particular stir: a proposed update to the DfT’s code of practice on autonomous vehicles that could see advanced tests on public roads far sooner than expected. The changes set out more clearly the mechanism by which autonomous vehicles can be trialled, strengthening the legal requirements for testing, in theory making it easier for companies to bring their prototypes to test and consequently to market.

In an area where there’s been so much chatter but little tangible progress since 2015, the government is looking to ensure the UK is the chief innovator in trials of self-driving cars. If successful it would move the UK closer to its ambition of having self-driving vehicles on UK roads by 2021, as well as send a clear message the UK was a world leader for autonomous vehicle testing.

However, this hasn’t exactly been welcomed far and wide by stakeholders. Where usually industry calls for government to keep up and to stimulate investment in innovation, this consultation has largely been met with a cry of “too much, too soon”. Industry experts have pointed out that the technology is far from ready, and the RAC has been clear that road users remain overwhelmingly uncomfortable about the prospect of interacting with driverless cars. Not least, the death of a pedestrian in Arizona during a road test in March 2018, as well as two fatalities during closed tests by Tesla, has delayed progress while serious questions, both technological and legal, are asked. More dangerous, more congested roads, on account of the need for ultra-cautious driving, is the prevailing prediction from observers should the government stay in the fast lane through this consultation. Christian Wolmar, the one-time Labour Parliamentary candidate who frequently commentates on transport issues, accused the government of “rushing forward with this technology long before it is ready”. While the SMMT has previously been positive about the impact of driverless cars, claiming they could provide “huge social, industrial and economic benefits to the UK”, it is telling it has not responded directly to this change. This can’t be the response the DfT was hoping for.

Nevertheless, the accelerated ambition from government could be seen as a grand signal to the UK and global business that Britain is the place to be for R&D and trialling. Certainly, the consultation launch was framed within the context of meeting the Industrial Strategy’s Future Mobility Grand Challenge and Ministers’ eagerness to position the UK as a world-leader in the sector. This could well be a boon to innovators in the industry, providing at the very least a pathway to making this technology a reality. In some respects, even by setting a target it cannot meet, the government has stolen a march in embracing a technology many see as crucial to the future of mobility.

The DfT may be under pressure in numerous policy areas, and as with many government departments, may be operating with a distracted upper management. But in attempting to take a lead on autonomous vehicles it has opened the door for business to contribute to creating the transport network of the future. If it is indicative of a general willingness by the Department to embrace new technologies more broadly, the next few years could be an exciting and fruitful time for business.

The episode also provides a lesson in gesture politics. The muted response from the automotive sector to government’s trumpet call for rapid change shows Ministers that without the substance to bring industry and the public with them, there’s not always a need for speed.

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The electric vehicle infrastructure problem

As set out in the Road to Zero Strategy, the government plans to end the sale of petrol and diesel vehicles by 2040, and for all vehicles to be zero-emission by 2050. This is a significant commitment to electric vehicles and is part of the government’s wider Clean Growth Strategy.

The government anticipates that most drivers will charge their electric cars at home or at their place of work. But these options are not available to everyone; many people do not have access to off-street parking, nor does every workplace have the capacity to provide electric vehicle charging. These problems are particularly pronounced in urban areas, which suffer the most from low levels of air quality.

The government believes that if electric vehicles are to become truly mainstream, there will have to be provision for on-street vehicle charging. Delivery of this infrastructure has been left to local authorities and the private sector (with some funding available from central government), but many local authorities do not have the money or the expertise to build it and have struggled to coordinate with network companies. This has meant the electric vehicle charging network lacks size and geographic coverage.

A further issue is that increased use of electric vehicles will increase the pressure on the UK’s energy network. The National Grid is confident that new capacity, and reinforcement of the existing grid, can be brought online in time to meet any increase in demand. However, this will require significant investment in new electricity generation capacity and in ‘smart charging’ technology. The latter is particularly necessary to ease the burden on distribution networks that could be subject to local overload.

The development of infrastructure can also be encouraged from the demand side; increased demand for electric vehicles should be a catalyst for greater provision of charging infrastructure. More electric vehicles on the road provides a greater incentive for firms and local government to work together to install electric vehicle charging points. However, the government has recently decided to reduce the subsidy for electric vehicles, and tax incentives relating to the use of electric vehicles remain limited. The government believes that the price of electric vehicles will fall as battery technology improves, but a lack of demand side support is likely to constrict growth of electric vehicle ownership and charging infrastructure.

Money, knowledge and planning are issues that affect all government infrastructure projects, particularly ones that involve a significant amount of coordination between different levels of government and the private sector. However, there is a more fundamental problem that has received little attention: how to make long-term infrastructure decisions when faced with technological uncertainty? Current government policy is to end the sale of petrol and diesel cars by 2040, but this is over 20 years away. In 20, or even 10 years’ time, how we use cars and roads might have completely changed. The danger for the government is that it might be doing the equivalent of investing in CD players, with digital streaming just around the corner.

The government recently announced that it wants to have self-driving cars on UK roads by 2021. While this is an ambitious target, it signals a technological revolution that could completely alter the way we use vehicles, and therefore the infrastructure those vehicles need. Should vehicles become truly autonomous, there may be no need for individuals to even own their own car. Driverless cars could be used like taxis and charged in out-of-town charging centres when not in use. Privately owned autonomous cars could drive to charging stations when not being used, negating the need for on-street charging.

This presents a puzzle for government: should it invest billions of pounds in a charging network that may only have a useful lifespan of a decade? While this may seem like an unattractive option, the alternative may not be very palatable either. If the government adopts a ‘wait and see’ approach and does not fully commit to on-street charging in the short-medium term, there is a danger that the take-up of electric vehicles will stall. This will directly affect the UK’s ability to achieve reductions in greenhouse gas emissions and could slow the growth of an important emerging industry in the UK.

The government is in an unenviable position. It will need to invest in on-street charging technology to keep to its promises on climate change, and to stick to its Industrial Strategy aims. But, thanks to rapid technological change, it may only be able to reap limited rewards from this investment. This dilemma tells us something about the role the state can play during periods of technological uncertainty. If private actors are unwilling to invest in a new technology due to concerns over its long-term profitability, investment from the state may be necessary to bridge the gap and allow greater gains to be realised in the future. This investment may only provide short-term or limited benefits directly, but it could lay a foundation on which private sector investment can then build. On-street charging infrastructure may not be a permanent fixture on our streets, but it may be required if the electric vehicle industry is to succeed in the UK.

Rather than assessing government investment in new technological infrastructure on a case-by-case basis, we should be content with a broader view. It is almost impossible to accurately predict the path of technological development, and under such conditions there will always be wins and losses from government investment. Rather than being distracted by the noise surrounding each individual decision, we should focus on whether government investment supports innovation and growth throughout the economy.

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Two significant shifts for Brexit

After weeks of stalemate and delay over Brexit, we now finally have two significant developments in the form of evolving positions from both main Party leaders.

Firstly, Jeremy Corbyn has bowed to pressure to support a second referendum if an amendment calling for Labour’s preferred approach to Brexit (a customs union and close alignment with the single market) is defeated. Secondly, Theresa May has confirmed that MPs will be allowed to choose between no deal and an extension to Article 50 (most likely for around three months) if she is unable to get a deal through the meaningful vote by 12 March.

Both shifts are highly significant and, taken together, appear to reduce, but by no means eliminate, the likelihood of a no deal outcome on 29th March and increase the likelihood of an Article 50 extension. However, no deal ultimately remains the default at the end of any extension period should a deal still prove elusive. In both cases, May and Corbyn appear to be moving against their own preferences under pressure to avoid further resignations, either from front bench roles or from the Party altogether. The creation of the new independent group of MPs last week has clearly been an influencing factor in both decisions.

Labour’s new position is particularly interesting. While the headlines have been focussed on their backing for a second referendum, their bottom line is that they want no deal off the table and will refuse to back May’s deal. They will therefore back whichever alternative avoids both those scenarios. Should a second referendum fail to command support in the Commons, as still seems likely, they will presumably back an extension to Article 50 and continue advocating for an alternative approach.

Theresa May’s approach, on the other hand, represents a major concession to the remainers and softer Brexiteers in her Party. This poses a big question to the ERG and Cabinet level Brexiteers who will be infuriated at this approach. They may now be faced with a straight choice on 12th March between some variant of May’s deal and the prospect of a delay to Article 50. But they have limited cards left to play and appear to be outnumbered in the Commons. Ultimately, it appears they will not be able to out-vote an amendment favouring delay over no deal.

So where does this leave us? The two most likely outcomes now are some variant on May’s deal, almost certainly accompanied by an Article 50 delay to facilitate ratification, or a delay to Article 50 to allow negotiations to continue. Either outcome would still only represent the next small step in an increasingly protracted and politically divisive process with plenty of drama and recriminations to follow. But they would at least allow business and investors to breath a sigh of relief. At least for a short while.

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