Business optimism slips to 18-month low

Global business sentiment has weakened sharply heading into the third quarter of 2025, with rising supply chain risks, trade policy uncertainty and financial pressures prompting firms to retrench and rethink investment plans. Dun & Bradstreet’s latest Global Business Optimism Insights report shows the optimism index fell 6.5% for Q3, the third consecutive quarterly decline and the lowest level since late 2023. Based on survey responses from around 10,000 business leaders across 32 economies and 17 sectors, the findings point to growing risk aversion and strategic caution worldwide.

The sharpest fall in sentiment came from the manufacturing sector, where optimism dropped 8.3%, led by metal manufacturing, automotives and capital goods. Service sector sentiment declined 5.4%. Margin compression remains a key concern, particularly in discretionary goods. Optimism regarding operating margins fell steeply for textiles (-17.0%), electricals (-15.0%), metals (-12.7%) and automotives (-9.7%) as firms struggle to pass on high input costs to consumers.

Supply chain concerns are also intensifying. The Global Supply Chain Continuity Index declined 9.7%, bringing the year-to-date fall to 18.6%. Dun & Bradstreet says the scale of the drop across both emerging and advanced economies suggests systemic disruption is now being priced into business expectations.

More than half of businesses outside the US are actively seeking alternative international partners or markets. The EU (23%) and Asia excluding the Chinese Mainland (15%) emerged as the preferred options. Just 5% identified the Chinese Mainland as their top fallback, reflecting heightened geopolitical sensitivities.

Trade tensions remain a key uncertainty. While 46% of firms anticipate a de-escalation through formal or informal agreements, 54% expect frictions to persist or intensify. In response, over a third of businesses are pivoting toward domestic markets as their primary hedge against rising tariffs.

Financial confidence is also waning, despite central bank rate cuts. The Global Business Financial Confidence Index dropped 3.4%, with only 60% of firms optimistic about borrowing costs, down from 70% in Q2. Fewer than half of respondents expect timely payment for goods and services, pointing to tighter working capital management.

The Global Business Investment Confidence Index saw a sharp 13.1% fall, its third straight decline. More businesses are holding back on capex and preparing for prolonged disruption, with the share expecting to raise long-term funds falling to 55.4%, from 70% in the previous quarter.

ESG sentiment held steady overall, though diverging trends emerged. Medium-sized businesses in emerging economies posted strong gains, while large firms in advanced markets saw an 8.4% drop. This is potentially due to compliance fatigue and evolving disclosure demands.

"In response to this uncertain environment, businesses should look to accelerate strategic shifts in their supply chains. Trade frictions, tariff risks and regulatory volatility are reinforcing the case for friendshoring, nearshoring and multi-sourcing as essential risk-mitigation strategies," said Arun Singh, Global Chief Economist at  Dun & Bradstreet . "At the same time, businesses are reassessing credit exposure and working capital cycles, with rising payment delays and tighter liquidity underscoring the need for stricter financial management. Agility - underpinned by real-time data and insights into capital structure, payment behavior, and supplier dependencies - will be essential for navigating the volatility ahead."

 

New African currency platform tackles US$5bn FX bottleneck

A new digital marketplace designed to allow African businesses to trade directly in local currencies has gone live, aiming to eliminate the costly reliance on hard currencies in cross-border transactions. Launched by the Pan-African Payment and Settlement System (PAPSS) in partnership with deep-tech firm Interstellar, the PAPSS African Currency Marketplace (PACM) allows corporates to exchange African currencies directly without routing through external currencies such as the US dollar or euro.

The platform targets a long-standing problem: Africa’s fragmented financial infrastructure, which comprises 41 national currencies and a patchwork of regulatory regimes. Until now, intra-African trade has often relied on foreign currencies to facilitate exchange, resulting in an estimated US$5bn lost annually through fees, delays, and inefficiencies.

PACM builds on the existing PAPSS payment rails, which have been rolled out across 17 countries, connecting 14 national switches and more than 150 banks. While those rails enabled real-time payments, the inability to convert local currencies efficiently remained a major obstacle. That’s the problem PACM aims to fix.

Businesses using PACM can access a continent-wide order book of currency pairs, enabling near-instant settlement and full transparency. All trades are compliant with local regulations, and the system is designed to operate securely using Interstellar’s blockchain-agnostic infrastructure.

By enabling direct currency conversion between African markets, PACM is expected to unlock liquidity, reduce exposure to exchange rate volatility, and release trapped capital. One high-profile example is in the airline industry, where more than US$2bn in revenues are currently stranded due to repatriation restrictions and currency depreciation in certain countries. Under the PACM model, an airline earning naira from ticket sales in Nigeria can now directly convert it to shillings for use in Kenya or elsewhere without a detour through hard currency markets.

Early adopters include over 80 African corporates trading across 12 currency pairs during the pilot phase. Firms such as ZEP-RE and Access View Africa have praised the platform for enabling faster, cheaper settlements.

While PACM was built to serve Africa, PAPSS has already fielded interest from institutions outside the continent seeking access to its infrastructure. The platform is now open to corporates, financial institutions, and other eligible participants across the region.

 

EM sustainability bonds lead on impact metrics

Emerging market (EM) sustainability bonds rank among the strongest performers globally across key environmental and social impact indicators, according to new research from Sustainable Fitch. Drawing on data from more than 4,700 labelled bonds, Sustainable Fitch finds that EM-labelled bonds, particularly those issued by sovereign, supranational and agency (SSA) entities, outperform their developed market (DM) counterparts in areas such as avoided emissions, nature conservation, and business support. These findings come from the firm’s Impact Metrics for Labelled Bonds dataset, which tracks impact per €1m invested over both annual and bond-lifetime horizons.

Despite their strong performance, EM issuers continue to lag behind DMs on disclosure. While 61% to 70% of DM-labelled bonds include at least one impact metric, EM SSA bonds only reach 48% at best. Environmental metrics other than avoided emissions are rarely reported, though nature-related disclosures are more common in EM SSA sustainability bonds.

Sustainable Fitch notes that EM social bonds show particularly strong outcomes, driven largely by sovereign issuers. The agency also highlights that EM SSA issuers stand out both for their relatively high disclosure rates and for delivering substantial environmental and social benefits.

According to Sustainable Fitch, this combination of outsized impact and improving transparency among SSA issuers underlines their importance in advancing social and environmental progress within emerging markets. While reporting gaps remain, the research suggests that better disclosure practices could help investors more accurately assess sustainability outcomes and allocate capital where it is most effective.

 

Germany’s budget may boost its economy more than expected 

Germany's budget for 2025 and spending plans for subsequent years, including defence outlays, are higher than expected. That means the country will run bigger deficits, resulting in faster near-term growth, Goldman Sachs Research economist Niklas Garnadt and his colleagues have written in a new report.

The federal deficit is planned to be 3.3% of GDP this year and 3.6% to 3.8% of GDP in subsequent years. Such deficits are stimulative, and they are “substantially more than we expected,” particularly this year and next, Garnadt said.

Goldman Sachs Research economists now see Germany's economy growing 0.4% in 2025, an increase of 0.1 percentage point from their prior forecast. They expect 1.4% growth in 2026, a 0.2 percentage point increase to the outlook. 

At the same time, Goldman Sachs Research lowered its forecast for GDP growth in 2027, from 2.0% to 1.8%. Our economists expect spending to be frontloaded and for it to be more tilted toward current expenses rather than investment. 

As a result, Goldman Sachs' growth forecasts for GDP expansion are now further above consensus expectations for 2025 and 2026 than previously estimated, and meaningfully above the current Bundesbank forecasts (as of 10 July).

 

Deutsche Bank activates real-time cash reporting via Swift

Deutsche Bank has launched Swift’s Instant Cash Reporting (ICR) service, giving corporate clients and financial institutions real-time access to account and balance data through a single, API-enabled connection. The new capability forms part of the bank’s broader push into API-based services and is designed to streamline treasury operations by delivering on-demand cash information via the Swift network. By combining Deutsche Bank’s API infrastructure with Swift’s secure connectivity and standardised data format, ICR allows corporates to retrieve current balance data from multiple accounts using a single, centralised access point.

The service operates using the ISO 20022 data model and secure JSON formatting, with high standards of authentication and data integrity built in. Swift acts as the intermediary, routing corporate API requests directly to Deutsche Bank, which responds with the relevant data based on the customer’s BIC and account selections.

The solution is currently live with Spanish energy firm Iberdrola, which has reported automation gains, reduced manual errors, and improved operational efficiency since implementing the ICR API. The firm also highlighted the benefits of real-time visibility, better integration with internal systems, and greater control over working capital through more accurate cash flow monitoring.

ICR also enables treasurers to spot unexpected incoming payments and optimise balances across accounts. These features are especially valuable in volatile interest rate environments, where daily cash positioning can have a material impact on returns.

Access to ICR is available to any corporate or financial institution connected to Swift. Deutsche Bank says it remains committed to supporting additional connectivity models as well, and welcomes other banks and corporates to adopt multi-bank API solutions to scale real-time reporting across the ecosystem.

“Deutsche Bank, leveraging Swift and the API Network, is setting a benchmark for the industry by offering clients innovative, real-time solutions that enhance cash visibility and operational efficiency,” said Johnny Grimes, Head of Corporate Cash Product at Deutsche Bank. “ICR addresses the key demand of corporates for multi bank solutions and consistent standards in the API space to simplify adoption.”

 

Tariff pause drives global supply chain rebound

Global supply chain activity accelerated sharply in June, as manufacturers responded to the anticipated end of the US tariff pause with increased procurement and inventory building. According to the latest GEP Global Supply Chain Volatility Index, supply chains operated at near-full capacity in several regions, with the index rising to -0.17 from -0.46 in May, its highest level so far in 2025. The improvement reflects a broad-based recovery in demand and supply-side operations, despite ongoing 10% tariffs imposed by the US administration.

Europe recorded a marked turnaround, with its index moving into positive territory for the first time in over two years. Activity was driven by front-loaded orders from US customers and a rebound in domestic and export demand, particularly in Germany. Manufacturers across the continent responded by operating at full capacity.

In North America, the index climbed to -0.06 from -0.24, signalling a similarly robust response. US manufacturers significantly increased purchasing of inputs, including raw materials, parts and components in anticipation of the current tariff suspension ending. This precautionary procurement strategy contributed to the surge in activity.

Asia also showed signs of improvement, with the regional index rising to -0.27 from -0.40. Supply chains strengthened in India, Japan and South Korea, but utilisation remained weaker in Southeast Asia. Factory purchasing in China continues to lag, dampening the overall regional picture.

The UK remained the softest of the major regions, with an index reading of -0.41. However, this marked a notable rise from May’s -0.97 and the UK’s strongest reading in seven months. Even so, elevated slack in local supply chains persists.

Global factory purchasing activity rose to its most robust level in over a year in June. The increase was led by North America, where concerns about the looming tariff expiry spurred firms to build up inventories. Reports of precautionary stockpiling, including the creation of safety buffers in warehouses, were at their highest point so far this year.

Despite this surge in demand and stockpiling, the index showed no signs of worsening cost inflation. Transportation costs remained in line with their long-term average, and reports of logistics-related price pressures were minimal.

Globally, supply availability continues to hold up well. The item shortages indicator remains historically low, and there is little evidence of labour-related disruption. Workforce capacity was sufficient to meet order volumes, and reports of backlogs due to staff shortages were steady and in line with long-term norms.

“In June, Europe shook off its long slump and global supply chains ran at full capacity - despite the uncertainty and on-and-off again tariffs,” said John Piatek, VP, Consulting, GEP. “But under the surface, companies are putting in place contingencies: stockpiling inputs, reshaping supplier networks, near-shoring operations, and securing supply chain financing.”

 

Investors retreat from equity funds amid Middle East conflict

Investor confidence slipped in June as the war in Iran weighed on sentiment, according to Calastone’s latest Fund Flow Index. While the data shows no signs of panic, there was a clear pullback from risk assets, with equity funds seeing outflows of £98m during the month, down from a £525m inflow in May.

The decline was not driven by heavier selling. Instead, a 7.5% fall in buy orders to £11.3bn, marking their lowest level since September 2023, indicates a pause in investor appetite. Sell orders fell 2.5% to £11.4bn.

UK equity funds saw the sharpest retreat, with net outflows of £594m continuing a long-term trend of domestic selling. Global equity funds also posted a rare £365m outflow, their first since the market reaction to Liz Truss’ mini-budget in 2022, and only the fifth monthly outflow in over a decade.

By contrast, European equity funds attracted £301m of inflows, while North American funds saw £306m of net buying. Although North American inflows were up from £115m in May, they remained well below the March-April combined total of £3.3bn.

Safe-haven strategies gained traction, as money market funds attracted £218m of inflows, more than double May’s £85m. Bond fund inflows, however, slowed to £195m from £328m the previous month.

Meanwhile, passive equity funds continued to dominate. Investors added £1.3bn to passives in June, even as overall equity flows turned negative. Actively managed equity funds saw £1.4bn of outflows.

Since 2015, passives have absorbed £86.3bn, compared to £20.6bn for active funds. Over the past two years, the gap has widened further, with passives gaining £43.6bn and actives losing £9.2bn.

While active global equity funds have historically attracted strong flows, passive strategies now lead year-to-date by £2.3bn, suggesting the tide may be turning.

 

EBA opens consultation on third-country branch rules

The European Banking Authority (EBA) has launched three public consultations aimed at harmonising how EU member states supervise third-country branches (TCBs) of foreign banks under the updated Capital Requirements Directive (CRD). The proposed measures focus on booking arrangements, capital endowment, and supervisory cooperation, and are designed to ensure consistency across jurisdictions and enhance regulatory oversight. The consultation period runs until 10 October 2025.

The first draft standard lays out new rules for how TCBs should record and monitor assets, liabilities, and off-balance sheet exposures. It also defines the minimum data required in a “registry book,” a recordkeeping tool intended to support supervisory transparency.

The second set of draft guidelines expands on the types of instruments branches can use to meet their capital endowment requirements. These must be deposited in an escrow account and remain accessible in the event of resolution or wind-down. Alongside cash and government-issued debt, the guidelines set out additional eligible instruments and conditions for their use.

The third draft standard targets supervisory coordination. It provides a framework for how EU supervisors should cooperate and share information on TCBs, both in normal conditions and in emergencies. It also introduces guidelines for establishing “colleges of supervisors” to oversee groups operating across the EU.

The proposals are part of the EU’s broader effort to apply consistent rules to foreign branches operating in the bloc. Under Directive (EU) 2024/1619, a minimum harmonisation framework now governs authorisation, prudential requirements, and supervisory practices for TCBs. Stakeholders can submit feedback via the EBA website. A public hearing is scheduled for 3 September 2025, ahead of the October deadline for comments.

 

Australia's Project Acacia enters pilot phase with real-money use cases

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) have named the organisations selected to take part in the next stage of Project Acacia, a research initiative exploring how digital money and settlement infrastructure could support the development of tokenised asset markets in Australia.

The pilot phase will test 24 use cases, 19 involving real money and assets, and five proof-of-concept trials using simulations. These span asset classes such as fixed income, private markets, trade receivables and carbon credits. Proposed settlement assets include stablecoins, bank deposit tokens, and a pilot wholesale central bank digital currency (CBDC). Participants will trial settlement on various distributed ledger technology (DLT) platforms, including Hedera, R3 Corda, Redbelly Network, and other EVM-compatible networks.

To facilitate industry participation, the Australian Securities and Investments Commission (ASIC) has issued regulatory relief to enable pilot activity, including transactions involving CBDCs. ASIC said the move would support responsible testing and foster collaboration between regulators and industry on innovative technologies.

Lead use case participants include major institutions such as Commonwealth Bank of Australia, Westpac, ANZ, and Northern Trust, as well as fintechs like Zerocap, Canvas, and Catena Digital.

Testing is expected to run for six months, with findings to be published in early 2026. These results will contribute to the RBA’s broader research into the role of digital money in supporting Australia’s financial system. According to Professor Talis Putnins, chief scientist at DFCRC, real-world settlement of tokenised assets on third-party platforms marks another “world-first” for Australia, and could unlock economic gains worth up to AU$19bn annually in efficiency and cross-border payment improvements.

 

Cyber threats rise for US public finance amid Iran conflict

Cyber risks facing US public finance entities have intensified following heightened geopolitical tensions and US involvement in the Israel-Iran conflict, according to Fitch Ratings. Iranian state-linked actors and hacktivist groups are increasingly targeting US critical infrastructure, with cyber intrusions expected to rise in frequency and severity.

Fitch points to recent joint advisories from federal cybersecurity agencies, including the Cybersecurity and Infrastructure Security Agency (CISA) and the FBI, warning of growing threats. Health care and utility systems have previously borne the brunt of such attacks, but future breaches are likely to include ransomware and distributed denial-of-service tactics.

While most past incidents have not triggered rating changes, Fitch warns that cyber breaches carry significant operational and financial risks. These include prolonged service interruptions, impaired cash flows, and reputational damage, particularly for public finance issuers operating legacy systems or lacking advanced cyber defences.

Cyber risk is factored into Fitch’s assessment of management and governance. Entities with weak controls or poor incident response planning may see their credit ratings affected. Robust risk mitigation, including staff training, vendor oversight, and cyber insurance, is viewed as critical to maintaining credit quality.

The sector’s vulnerability is compounded by widespread use of cloud services, remote work environments, and interconnected data systems that can amplify the impact of a single breach. Smaller municipalities may be especially at risk, due to limited budgets and difficulty attracting skilled IT staff.

Fitch also flags concerns about reduced federal support, noting a one-third cut to CISA staffing this year, which could further weaken cyber resilience across state and local governments. As threat actors evolve and nation-state targeting intensifies, Fitch emphasises that public finance issuers must improve cyber preparedness or risk serious consequences.

 

Allianz Trade integrates Stripe to streamline B2B e-commerce payments

Allianz Trade has partnered with Stripe to enhance its order-to-cash solution for B2B e-commerce merchants and marketplaces. The collaboration brings together Allianz Trade’s credit insurance and risk management expertise with Stripe’s payment infrastructure to address longstanding pain points in B2B transactions.

The joint offering, Allianz Trade pay, is designed to digitise and automate the entire order-to-cash process. It covers key stages from order validation and credit assessment through to invoicing, collections, and, if necessary, indemnification. The integration with Stripe introduces faster payment processing and real-time reconciliation to the platform, aiming to reduce delays and manual effort in payment handling.

According to Allianz Trade, one of the key challenges in B2B e-commerce is the fragmented and often manual nature of order-to-cash processes. These inefficiencies can lead to billing disputes, delayed payments, and working capital constraints. The enhanced solution is intended to help sellers manage payment flows more effectively while offering buyers a simpler way to pay via SMS or email links.

Once a seller issues an invoice with agreed payment terms, reminders are sent to the buyer along with a Stripe payment link. Payments are then automatically reconciled within the system, and sellers can monitor transactions via a central dashboard. If a payment fails to arrive, Allianz Trade provides indemnification in line with its credit insurance coverage.

By combining digital payment tools with trade credit insurance, the solution aims to improve efficiency and cash flow reliability for businesses engaged in B2B e-commerce.

 

Mastercard and Pay4You target tail spend efficiencies

Mastercard has partnered with Pay4You to offer a virtual card-based solution for managing corporate tail spend across Europe. The collaboration integrates Mastercard’s Virtual Card Network (VCN) technology with Pay4You’s self-service portal, aiming to bring greater control and visibility to the high-volume, low-value purchases often overlooked in procurement strategies.

Tail spend typically accounts for around 20% of a company’s total expenditure but includes a disproportionately high number of transactions. These are often processed manually or through less efficient systems, driving up administrative costs and compliance risks.

The integrated solution is designed to simplify payments, improve compliance, and enhance the employee experience. It also allows issuers to shift payments traditionally made via account-to-account transfers onto card rails, opening new transaction flows.

Pay4You will also make use of Mastercard’s embedded VCN capabilities, which are designed to ease onboarding for banks, platforms and corporates, and support the broader adoption of virtual card payments.

The move aligns with Mastercard’s strategy to promote digital payment innovation in the B2B space, while Pay4You aims to expand its reach by guaranteeing card acceptance across Continental Europe. 

 

Worldpay expands embedded payments offering

Worldpay is extending its embedded payments solution, Worldpay for Platforms, to the UK and Canada, while deepening its reach in Australia. The move responds to growing demand from small- and medium-sized businesses for integrated access to financial services, with 90% of firms describing such access as critical, according to Worldpay research.

The Worldpay for Platforms service allows software providers to embed secure, scalable payment experiences directly into their platforms. It is designed to support automated reconciliation, compliance, and centralised payment support for end-users, helping SaaS providers improve customer experience and boost retention.

One early user of the solution in Canada is CampLife, an accommodation software provider, which has adopted the embedded offering to create a more seamless booking and payments process for both campsite operators and travellers.

Worldpay says its platform simplifies integration via a single API, offering access to a wide range of payment methods including cards, direct debits and digital wallets. By expanding geographically, the company aims to help vertical software providers unlock new revenue streams and strengthen their competitive edge in local markets.

 

KeyBank launches AI-powered AR matching tool

KeyBank has launched KeyTotal AR, an AI-powered accounts receivable (AR) platform developed in partnership with Versapay. The tool is designed to automate and streamline the invoice-to-cash process for middle-market businesses, supporting faster collections, improved cash flow, and reduced AR costs.

The platform uses machine learning to automate invoicing and cash application, enabling clients to accelerate decision-making and reduce manual processes. According to KeyBank, the tool is capable of cutting AR costs by up to 50%, while also helping businesses manage payments more efficiently through a unified, cloud-based system.

This launch marks a further step in KeyBank’s fintech strategy, which aims to integrate advanced technologies into its commercial banking offerings. By embedding automation and analytics into AR operations, KeyBank is targeting growing demand from businesses seeking to optimise working capital in a more volatile operating environment.