Investment in IT, which had been growing at around 20% a year, actually fell in the first quarter. As a result, and as in the UK, the US has experienced a fall in manufacturing output while consumption and the housing market appear more resilient. Prompt action by the Federal Reserve has so far limited the slowdown to a downturn in inventories and fixed investment. Whether the slowdown in the US will be more prolonged than is embodied in the current consensus view will depend critically upon personal consumption. And, in turn, that will depend upon expectations of future productivity and hence income growth in the US. If there were to be a reappraisal of the extent of the increase in productivity growth in the US, then there might be a further downward revision of asset prices and a lower path for consumption spending. So far, the evidence, both from consumption directly, and financial markets indirectly, suggests that no major reappraisal has occurred. Share prices have fallen from their peaks of last year. But price to earnings ratios remain well above historical levels. The average P/E ratio in the US since 1900 was around 14. The ratio peaked at over 30, falling back to current levels of well over 20. Interestingly, the divergence of valuation between hi-tech and other companies has virtually disappeared in recent months. There has also been a reduction in the perception of downside risks to equity returns.
Our ongoing focus on international standard setting and policymaking, including in relation to climate change  The final aspect of competitiveness I would like to discuss today is the future role of the PRA and  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  UK in shaping policy and engaging with other regulators at an international level. Even prior to withdrawal from the EU this was an area in which the PRA invested considerable time and effort, and post-departure this assumes even greater importance – now more than ever, it is important that the UK view and experiences are captured as part of international standard setting process. We are well positioned here given that Vicky Saporta, our Executive Director of Prudential Policy, also serves as Chair of the International Association of Insurance Supervisors (IAIS). Why is this important to UK competitiveness? International standards aim to create a common language for the supervision of internationally active insurance groups; to level the playing field internationally for insurers; and to simplify regulation for large international groups. To this end, the implementation of common international standards should serve to reduce barriers to cross border insurance activity globally, allowing for new international activity and removing friction where this is already taking place. Ensuring that the UK views are reflected properly in any international standards that are created reduces the risk that UK insurers are faced by regulatory regimes that are not wholly compatible with their business models and lines of business.