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CFOs planning to slow pay increases again in 2025 - Weekly roundup: 28 January

CFOs planning to slow pay increases again in 2025

CFOs are planning smaller pay increases for employees in 2025, according to a survey by Gartner, Inc. A poll of 300 CFOs and finance leaders in October 2024 found that while compensation remains a top area for budget boosts, second only to enterprise technology spending, pay increases have been slowing down for three years in a row. For example, only 61% of CFOs plan to increase average employee compensation in 2025, compared to 71% in 2024 and 86% in 2023.

“The slowdown in pay increases reflects falling rates of inflation and lower levels of voluntary employee attrition,” said Randeep Rathindran, Distinguished VP, Research in the Gartner Finance practice. “However, even though the labour market is cooling, CFOs must balance the potential risks of attrition and low engagement as employees still face stubbornly high costs for household necessities.”

“There has been a shift toward smaller pay increases,” Rathindran added. “The proportion of CFOs planning to boost average employee compensation by 10% or more fell from 16% in 2023 to 11% in 2025. While 79% of respondents planned increases of 4% to 9% in 2023, only 50% are planning the same in 2025.”

Gartner experts advise CFOs to work with their CHRO to develop a differentiated compensation strategy that ensures packages for critical talent and that key roles remain competitive as the market evolves.

“CFOs who are significantly reducing employee wage increases should use leading indicators of employee engagement to fully understand the potential impact on talent attrition,” concluded Rathindran.

 

UK business activity growth edges up in January

The flash Purchasing Managers’ Index (PMI) data for January shows that UK private sector output expanded marginally in the month, with the growth rate edging to a three-month high. This was primarily due to sustained modest service economy growth, offsetting lower manufacturing production. However, total new work fell at the fastest pace since October 2023. Survey respondents cited subdued underlying demand conditions and cutbacks to non-essential spending.

Employment levels decreased for the fourth month running, which businesses often linked to rising cost pressures. Input price inflation accelerated to its strongest since May 2023. Meanwhile, average prices charged by private sector firms increased at the fastest pace for 18 months in January.

The headline seasonally adjusted S&P Global Flash UK PMI Composite Output Index registered 50.9 in January, up from 50.4 in the previous month and the highest reading since October 2024. Although signalling a faster expansion of private sector output at the start of 2025, the latest reading was only slightly above the 50.0 no-change month and remained lower than the long-run series average (53.6).

Marginal business activity growth across the service sector (index at 51.2) contrasted with a reduction in manufacturing output for the third month running (49.3). That said, the manufacturing sector's contraction rate eased markedly since December. Companies reporting a rise in business activity generally cited efforts to complete unfinished work, alongside a positive impact from new product launches and successful marketing strategies.

Staffing numbers continued to fall across the private sector, which extended the downward trend that began in October 2024. A solid overall reduction in workforce levels reflected cutbacks in both the manufacturing and service sectors, with the latter recording a faster pace of job shedding. Lower employment was typically attributed to hiring freezes and the non-replacement of voluntary leavers in the wake of rising payroll costs. Many firms suggested that the forthcoming hike in employers’ National Insurance had resulted in cutbacks to recruitment plans, while others cited the impact of a post-Budget slump in business confidence.

January data signalled a sharp and accelerated increase in overall cost burdens across the private sector economy. The rate of inflation was the steepest for just over one-and-a-half years, with marked accelerations seen in both the manufacturing and service sectors. Survey respondents often commented on higher salary payments, energy costs, and prices for imported raw materials. Efforts to pass on higher business expenses resulted in a robust increase in average prices charged, with the rate of inflation the fastest since July 2023.

Meanwhile, business activity expectations weakened for the sixth consecutive month in January. The respective index pointed to the lowest degree of business optimism since December 2022, with the latest decline driven by falling confidence across the service economy.

Companies expecting growth over the course of 2025 mostly cited new product launches, the impact of rising technology spending, resilient demand for business services, and planned expansion in overseas markets. Meanwhile, those forecasting a downturn in business activity during the year ahead overwhelmingly noted unfavourable UK economic prospects, higher employment costs, and a post-Budget slump in clients’ investment spending plans.

“The data provides some reprieve for the UK economy, which has come under fire in recent weeks amid a spike in government borrowing costs and concerns about persistent inflationary pressures,” commented Harry Woolman, Analyst at Validus Risk Management. “Nevertheless, the outlook remains volatile for the UK amid elevated debt costs for the Labour government. The pound is up close to 1% against the dollar this morning.”

 

Deutsche Bank and Yonyou to support Chinese enterprises going global

Deutsche Bank China and Yonyou Network Technology Company have signed a strategic memorandum of understanding (MoU). The partnership aims to establish a new global financial services model with global treasury management at its core, driving innovation in digital financial services and supporting the globalisation strategies of Chinese enterprises.

Under the MoU, the two parties will focus on global treasury management by connecting Yongyou’s treasury management system with Deutsche Bank’s financial system to enable seamless data access and instruction transmission. This collaboration is designed to help enterprises optimise financial resources, reduce costs and enhance risk control. 

The partnership aims to deliver efficient domestic and cross-border payment solutions. Leveraging Deutsche Bank’s international network and platform, the partnership will streamline financial management processes and enhance the global cash operations of Chinese enterprises expanding overseas.

In addition to global treasury management, the pair will develop financial solutions tailored to diverse corporate client needs, foster financial technology advancement, and support cross-border finance. This partnership aims to expand the market ecosystem, combining Deutsche Bank’s global network and expertise with Yonyou’s client base to benefit the two parties mutually.

“By combining our strengths, both parties will leverage their expertise to drive innovation and deliver comprehensive international financial services to Chinese enterprises,” said Leo Yin, President of Deutsche Bank China. “Supporting Chinese companies’ global growth ambitions is one of Deutsche Bank’s core missions, and we are eager to contribute to this important journey.”

 

Standard Chartered introduces cross-currency FX suite

Standard Chartered has announced the launch of SC PrismFX, its cross-currency transactional foreign exchange (FX) solutions suite. SC PrismFX is available for the bank’s corporate, financial institution (FI), non-banking financial institution (NBFI), and paytech clients globally.

SC PrismFX integrates Standard Chartered’s suite of digital, integrated transaction banking, financial markets, and digital platforms capabilities under one brand name in a bid to deliver robust FX payment services to its clients across over 130 currencies in more than 40 markets.

The bank says that SC PrismFX offers its clients a spectrum of cross-border transactional foreign exchange solutions to successfully navigate complex global and local market nuances by leveraging the bank’s foreign exchange expertise, digital capabilities, and extensive payment network across emerging and developed markets.

For corporate clients specifically, the solution is designed to provide a consistent transactional FX payments experience across the bank’s markets globally, with competitive FX pricing and expert emerging markets insights coupled with a suite of advanced payables, receivables, and trade finance solutions.

 

Four risks that could derail global credit in 2025

With macroeconomic conditions normalising, the global credit landscape appears poised for greater stability in the year ahead. A report from Moody’s shows the credit ratings agency anticipates G-20 GDP growth of 2.6% this year, and for the 12-month speculative-grade default rate to decline to below 3% by year end from 4.8% at year-end 2024. However, these forecasts are based on current policies and will change with new developments; for example, a US decision to apply tariffs.

There are several sources of risk that could disrupt this relatively sanguine outlook. The report explores four scenarios that, while not exhaustive, could significantly alter macroeconomic and credit conditions and potentially have rating implications. Other sources of risk such as climate events, artificial intelligence and social unrest could also trigger material shocks locally or for a few credits, but are less likely to have significant and wide-ranging implications.

One risk is that President Donald Trump enacts his campaign announcements on trade, tax and immigration. Although institutional constraints and market reaction will likely temper more radical policy action, putting sweeping tariffs in place, removing millions of undocumented migrants and pushing through further tax cuts would lead to a significant and sudden increase in inflation in the US. Assuming the Federal Reserve (Fed) responds to higher inflation by raising rates, this would be damaging for domestic issuers, particularly lower-rated firms, but also externally, for instance, for emerging market issuers. If Trump tries to influence the Fed, it would damage institutional credibility.

A second risk is that European governments face major burdens from defence spending. If the US withdrew assistance to Ukraine and peace talks were unsuccessful, the associated security risk would likely lead to a rise in risk premia across Europe. Moreover, given the low likelihood of a quick deal on a common EU debt funding tool, European governments will probably have to take on more debt directly to partly fill the gap, testing market confidence. European governments would also have to spend significantly more on their own military and defence capabilities. Spending cuts in other areas and tax rises in response could have knock-on effects for some sectors as well.

There is also a risk that tensions in the Middle East trigger a broader conflict, hitting energy supplies. Despite the recent ceasefire agreed between Israel and Hamas, following the ceasefire with Hezbollah in November, tensions remain high. There is still a real risk of a misstep leading to a prolonged conflict between Israel and Iran that would see the US getting involved. In that scenario, oil prices could jump, and Iran might disrupt shipping in the Strait of Hormuz. This would hurt the global economy, leading to weaker economic activity and higher inflation.

Finally, shocks could trigger a collapse of risk appetite. The current combination of high valuation measures and relatively low volatility already suggests that markets may not be placing enough weight on downside scenarios. If investor sentiment turned acutely negative across a range of financial markets, then asset prices would fall, credit spreads increase, and there would be significant economic disruption as a result. There would be more defaults as issuers with refinancing needs struggled to cope with higher refinancing costs.

 

Assessing the ‘Goldilocks’ US job market

A week after Donald Trump was sworn in as the 47th president of the US, the country’s economy is “in the sweet spot of healthy growth and gradual disinflation,” according to Jan Hatzius, Chief Economist at Goldman Sachs Research (GSR). The GSR team estimates that real (inflation-adjusted) GDP grew 2.6% in the fourth quarter, and they expect a similar pace of expansion in 2025. 

There’s a “Goldilocks flavour” to the job market, as its strength doesn’t suggest the labour market will overheat, Hatzius writes. “It’s still a low-hiring/low-firing labour market,” he says.

GSR’s composite measure of labour market tightness — which includes unemployment, job openings, quits, and surveys of conditions as perceived by both firms and workers — has stabilised at a level below the 2018-2019 period, when inflation was slightly under the Federal Reserve’s target. Hatzius points out that, given the 1.5-2% productivity trend over the past five years, it’s not surprising that wage inflation is decelerating into the 3.5-4% zone that’s consistent with 2% price inflation.

 

Up to $50bn in potential efficiency gains revealed in banks’ risk and compliance 

Between $25bn and $50bn in potential efficiency gains can be realised through targeted enhancements in banks’ risk and compliance functions alone without compromising effectiveness, according to a report released by Nasdaq and Boston Consulting Group (BCG). Titled ‘The New Growth Imperative: Cutting through Complexity in the Financial System’, the report reviews the interconnected challenge of complexity and complicatedness and finds that while external complexity continues to increase, excess layers of internal complicatedness have accumulated.

Whereas complexity can be viewed as external factors beyond the control of individual organisations, complicatedness arises from how organisations respond and the mechanisms created to adapt to that complexity. Nasdaq’s analysis suggests that by reducing complicatedness in processes across bank risk and compliance functions, significant resources can be released and deployed towards critical investment areas such as the digitisation of the global economy, the modernisation of our energy systems, and the need for next-generation power solutions to enable the artificial intelligence revolution.

In addition, the report finds that financial institutions are turning toward strategic technology partners that offer holistic, best-in-class solutions to their biggest risk and compliance challenges as a means of addressing the exponential increase in complexity. Only 22% of industry professionals have a preference to build software solutions in house, indicating that industry recognises the value of systems-based solutions from trusted partners.

The report also provides a call to action to bank leaders to amplify the talent of their teams by shifting from a people-based to a people-led approach, where systems serve as the base of unleashing human potential, reducing rote processes and procedures and leveraging the scale of software platforms to achieve the same level of effectiveness with significantly enhanced efficiency. This call also includes encouraging all stakeholders in the ecosystem, including regulators, to embrace new ways of working and to embrace the capabilities of modern technology better.

 

Riksbank urges bank input to enable instant payments between different currencies

The Riksbank has invited Swedish banks to participate in the ongoing work to enable instant cross-currency payments within Europe via the Target Instant Payment Settlement (TIPS) system. This cooperation will include discussions on the design of the TIPS cross-currency service and actual testing of it.

The ECB, the Riksbank and Danmarks Nationalbank have been working together for some time on the initiative to facilitate instant payments between currencies. Initially, payments will be possible between euros, Swedish kronor and Danish kroner. The central banks provide the underlying infrastructure for the payments. Banks and businesses, in turn, need to develop services to enable instant cross-currency payments to be made by businesses and individuals.

In 2028, Norges Bank is planning to join TIPS, opening up the possibility that TIPS cross-currency may also support payments in Norwegian kroner in the future. At the same time, the ECB is exploring the possibility of enabling payments between currencies outside Europe by linking TIPS with other similar international instant payment systems.

“The Riksbank has long been working to make it easier to make payments between different currencies,” commented Per Jansson, Deputy Governor of the Riksbank. “In addition, the G20 has a global goal of making cross-currency payments more secure, more efficient and cheaper. The work on TIPS cross-currency is an important step towards making this a reality but it also requires cooperation between central banks and the market. We are therefore keen for Swedish banks to express their interest in participating in this work.”

 

EPC selects Swift for its directory service

The European Payments Council (EPC) has announced the start of the delivery project for the EPC Directory Service (EDS), after selecting Swift as supplier for the development and operations of the EDS and after signing an agreement at the end of 2024. Swift has been selected as EDS provider after a request for proposal (RFP) process running in the second and third quarters of 2024 and the subsequent approval by the EPC Board in September 2024.

The EDS is a key component for payments service providers (PSPs) to operate the EPC Verification Of Payee (VOP) scheme, a scheme that allows the PSPs’ compliance with the Instant Payment Regulation (IPR) requirement to offer an IBAN-name check service, before payers may authorise a payment by credit transfer or instant credit transfer.

The EPC VOP scheme relies on exchanging VOP messages between payer and payee PSPs in accordance with the rules set out in the VOP rulebook and implemented on the basis of application programming interfaces (APIs) designed by the EPC.

In the architecture of the VOP scheme, the EDS enables reachability and interoperability between VOP scheme participants. It stores and makes available to authorised business users in a secure manner data for identification of participant PSPs, their adherence to the EPC VOP scheme and options, and API endpoints (or Uniform Resource Identifier or URIs). The EDS will be accessible to scheme participants adhering to the VOP scheme and to the Routing and Verification Mechanisms (RVMs) operating on their behalf.

The EDS won’t store any personal data or IBAN, as it will only be used for routing purposes between business entities (PSPs and RVMs). Furthermore, the EDS will be used not only to support VOP scheme but also for all other EPC API-based schemes, such as the SEPA Request-to-Pay (SRTP) and the SEPA Payment Account Access (SPAA) schemes.

The EDS platform is set to go live by 5 October 2025, along with the entering into force of the EPC VOP Rulebook. The next phase is the publication of technical guidelines for PSPs and RVMs in February.

 

GTreasury expands global development hub in Dublin

GTreasury has announced a significant expansion of its development operations in Dublin, Ireland and established the location as the company’s primary development hub. This strategic move aims to accelerate GTreasury’s technology innovation, including honing and advancing its AI-driven treasury solutions.

Growing its Dublin footprint aligns with GTreasury’s commitment to supporting the office of the CFO and treasury teams as they navigate increasingly complex global financial environments. As businesses require advanced real-time financial insights, complex risk management, and automated operations, the technology company says it is positioned to rapidly deploy new capabilities and stay ahead of evolving market needs. The expanded Dublin office will focus on solution delivery, increased data analytics, faster time-to-market for new capabilities, and seamless adaptability for tomorrow’s treasury challenges.

The Dublin expansion marks a significant milestone in GTreasury’s growth strategy. Scaling its development capabilities will help the firm support its worldwide customer base with more comprehensive solutions for cash visibility, payments, risk management, and working capital optimisation - while maintaining the company’s commitment to fast time-to-value and platform adaptability. 

“Dublin’s rich technology ecosystem, including its strong universities and exceptional talent pool, make it an ideal location for GTreasury’s development operations,” said Lars Powers, Chief Technology Officer, GTreasury. “By anchoring development in Dublin, we’ll accelerate our innovations around intelligent cash forecasting, risk analytics, automation capabilities, and more. The investment strengthens our ability to deliver industry-leading AI and machine learning solutions that transform how organisations manage their treasury operations.”

 

Worldline and Wix partner on business payments solutions in Europe and APAC

Worldline has announced a joint strategic partnership with Wix to bring its small and medium enterprises (SMEs) a platform to create, manage and grow their online presence, and ultimately increase revenues. The partnership will also enable Wix users access to Worldline’s local payments and banking solutions to better meet customer expectations.

With this partnership, new and existing Worldline customers will have access to Wix’s platform to build and manage their online store with features to support various aspects of operations, including product catalogue management, order fulfilment, inventory and invoice management, marketing tools, and bookings management. 

Additionally, Wix users will be able to ise Worldline’s payment solutions that support local card schemes to seamlessly process transactions with customers’ preferred payment methods – whether via credit, digital wallet or local card schemes.

This is the first component of a collaborative and strategic initiative between the two companies and will be available on a rolling basis in various countries throughout Europe and Asia Pacific.

 

Mashreq expands corporate banking footprint to Oman

Mashreq has announced its entry into Oman, seeking to strengthen its position with a range of personalised financial services tailored for the Sultanate’s evolving corporate and public sectors. This strategic move underscores Mashreq’s intent to contribute to Oman’s Vision 2040, with ambitions to fuel economic diversification and elevate Oman’s position in the global financial landscape.

Mashreq’s entry into Oman will see the bank bring a suite of banking services, including treasury, global transaction banking, and sustainable finance. The bank aims to unlock value in critical sectors such as tourism, logistics, manufacturing, and renewable energy, in line with Oman’s economic objectives.

“Oman’s strategic location and its dynamic economic landscape make it essential to Mashreq’s international growth ambitions,” commented Ahmed Abdelaal, Group CEO of Mashreq. “Our goal is to support Oman’s economic objectives through tailored financial solutions that not only enhance regional integration but also reinforce Oman’s influence in the global financial ecosystem. Our commitment is to high-growth markets, leveraging trade, investment, and corporate banking opportunities while delivering an exceptional client experience built on convenience, accessibility, and ESG-driven initiatives.”

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