a lack of investment opportunities could also play a role, weak investment and associated weak gdp growth could show up as consumption - led growth, not least because consumption is stickier. for more details, see www. bis. org / publ / qtrpdf / r _ qt1703e. htm. all speeches are available online at www. bankofengland. co. uk / news / speeches chart 7 : evidence of a trade - led global slowdown index ( long - term average = 100 ) percentage changes, 3 months on 3 months ago us & ea capital goods orders ( rhs ) oecd business confidence ( lhs ) world trade in goods ( rhs ) - 2 - 4 indices, 50 = no change manufacturing pmi composite pmi export orders pmi sources : conference board, cpb, european commission, ecb, markit economics, oecd, and bank calculations. all speeches are available online at www. bankofengland. co. uk / news / speeches chart 8 : g7 growth increasingly reliant on consumption investment private consumption net trade other gdp contributions to four - quarter growth ( % ) - 1 sources : eikon by refinitiv, imf weo, oecd and bank calculations. notes : growth in real purchasing power parity ( ppp ) - weighted gdp. as the experience of brexit has shown, the indirect effects of trade tensions on business confidence and investment can be much more material than the direct effects alone. uk business investment has flat - lined since the referendum, underperforming both previous recoveries and the international experience ( charts 9a and 9b ). there is also evidence that these uncertainty effects are holding back foreign direct investment in the uk. 7 the uk ’ s experience can be used to assess the extent to which the deteriorating trade outlook can explain the sea change in financial markets. data from the department for international trade indicate that the number of new fdi projects in the uk in 2018 / 19 fell to its lowest level in five years. all speeches are available online at www. bankofengland. co. uk / news / speeches chart 9a : uk business investment underperformed compared with previous recoveries … indices : peak in gdp = 100 range of previous recessions eu referendum act quarters since pre - recession peak in gdp sources : ons and bank calculations notes : chained ‑ volume measure. recessions are defined as at least

soon stabilise before recovering to around its potential rate by the middle of next year. this reflected : i ) the relative absence of fundamental imbalances in the global economy that would by themselves be expected to derail the expansion ; ii ) a considerable degree of expected policy support to the expansion ; and iii ) some positive momentum in trade discussions. all speeches are available online at www. bankofengland. co. uk / news / speeches on 5 may, with the ink on the mpc ’ s report barely dry, president trump announced further increases in tariffs on imports from china and china retaliated. later that month, the us additionally threatened new tariffs on mexico despite having only recently agreed a revised nafta accord. the us threat to increase tariffs on auto imports from europe remains. the latest actions raise the possibility that trade tensions could be far more pervasive, persistent and damaging than previously expected. the rationales for action are broadening. initially motivated by concerns over bilateral trade imbalances, trade measures are now being taken in response to issues ranging from immigration to intellectual property protection to control of the technologies underpinning the fourth industrial revolution. 2 it has even become fashionable for some to speak of a new cold war. that bears a moment ’ s reflection for a lot has changed. at the height of the cold war, us - ussr trade was worth $ 2 billion a year ; today, us - chinese trade clocks $ 2 billion a day. more broadly trade in intermediate goods and services has doubled since the fall of the berlin wall, and production has become increasingly integrated across borders. 3 the longer current tensions persist, the greater the risk that protectionism becomes the norm. once raised, tariffs are usually slow to be lowered. consider that half a century ago the us imposed tariffs on light trucks due to a dispute over chicken exports to europe. while the chickens were soon forgotten, the truck tariffs remain in place. reflecting the more febrile atmosphere, a trade war has shot to the top of the risks most worrying investors ( chart 3 ) and measures of global economic policy uncertainty have reached record highs ( chart 4 ). such concerns are contributing to sharp reductions in corporate earnings expectations ( chart 5 ), though for the time being the falls in expected policy rates have cushioned the impact on equity prices. the markets ’ faith in the power of monetary policy is notable. business confidence has fallen across the g7 to its lowest level in five years ( chart 6a