Thanks BlackPeter. The 2.9% interest includes what companies must retain for all manner of reasons too and even considering that it's still comparative to a term deposit. So from here companies earnings must rise significantly to justify current prices (which doesn't seem likely). So can we conclude that even considering record low OCR the valuations are very high? I think current PE is around 24 so if 1 year forward is predicted at 33 that means falling earnings.

As buffet says, any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by current interest rates. So the lower the interest rate the higher the value of a cash stream from shares.