Flash data shows war’s growing economic toll

Business activity diverged across the eurozone, UK and US in April as the war in the Middle East pushed up prices, disrupted supply chains and triggered precautionary stock-building, according to the latest flash PMI surveys.

Europe was hit hardest. The eurozone’s composite output index fell to 48.6 from 50.7 in March, dropping below the 50 no-change mark for the first time in 16 months and reaching a 17-month low. That downturn was driven by services, where the business activity index slumped to 47.4 from 50.2, its weakest reading in 62 months. Manufacturing, by contrast, held up better: the output index edged up to 52.2 from 52.0, while the headline manufacturing PMI rose to 52.2 from 51.6, a 47-month high.

The UK and the US both remained in expansion territory, but the detail was less reassuring than the headline. The UK composite PMI rose to 52.0 from 50.3, with services at 52.0 from 50.5 and manufacturing output back into growth at 51.8 from 49.2. The US composite index also climbed to 52.0 from 50.3, while services improved to 51.3 from 49.8 and manufacturing output jumped to 55.7 from 53.2, the strongest reading in four years.

Manufacturing strength in all three economies came with an obvious caveat: much of it reflected safety-stock building rather than clean end-demand improvement. Eurozone manufacturers increased output partly to build buffer inventories as supplier delays worsened. British factories reported customers bringing forward orders and building stocks ahead of feared shortages and price rises. American manufacturers likewise saw output and new orders boosted by what survey respondents described as emergency buying in anticipation of tighter supply and higher costs.

Supply chains were a common stress point. Eurozone manufacturers reported the greatest lengthening in supplier delivery times since July 2022. UK factories saw the sharpest deterioration in vendor performance since June 2022. In the US, supplier delivery times lengthened to the greatest extent since August 2022, extending an eight-month run of worsening delays.

Prices also accelerated across all three economies. Eurozone input costs rose at the fastest pace since the end of 2022, while output price inflation hit a 37-month high. UK private sector cost inflation reached its highest level since November 2022, with service sector input cost inflation posting its biggest monthly acceleration since the survey began in 1996. In the US, average selling prices for goods and services rose at the fastest rate since July 2022, while input cost inflation hit an 11-month high and was the second-highest in more than three years.

Demand looked weaker beneath the surface, especially in services. Eurozone new orders fell at the fastest pace in almost a year and a half. UK service sector demand remained fragile despite stronger headline activity. US services new business rose only marginally and at the slowest pace in two years, with export demand still falling.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the eurozone was facing “deepening economic woes” as the conflict pushed the economy into decline while “driving inflation sharply higher”. In the UK, he said the April rebound reflected “a short-term boost from a rush to secure purchases” ahead of feared shortages and price rises. For the US, he warned that output had recovered only modestly, with the “vast service sector acting as the principal drag” while stock-building in manufacturing echoed pandemic-era behaviour.

For treasurers, the message is awkward but clear: the war is not only lifting energy and transport costs, but also distorting inventories, slowing deliveries and clouding demand. That leaves finance teams managing a tougher mix of working capital pressure, margin risk and uncertainty over how long central banks can look through another inflation spike.

 

UK backs fintech payments overhaul

The UK government has outlined a new package of payments and digital finance measures, with legislation, consultation and regulatory changes intended to reshape how payment services are overseen as stablecoins, tokenised deposits and AI-driven transactions move closer to the mainstream.

A central element is a forthcoming consultation on reforming the regulation of payment services and electronic money. The government said it wants to integrate those rules more closely into the UK’s core financial services framework, creating a single approach covering both traditional and tokenised payments. That would include regulating stablecoins used for payments where they are issued under the UK’s forthcoming new regulated activity for stablecoin issuance. The government also said it plans to bring forward legislation aimed at reducing administrative burdens for firms seeking to provide stablecoin payments, while keeping safeguards in place.

Another strand of the package focuses on how rules may need to change as payment activity becomes more automated. The Treasury said it will explore how payment services regulation should adapt to transactions carried out by AI agents on behalf of consumers and businesses.

Open banking is also part of the reform agenda. The government said it plans to give the Financial Conduct Authority new powers to regulate the future of open banking, including support for the development of new commercial open banking payment schemes.

Alongside the payments changes, the Treasury has appointed Chris Woolard as Wholesale Digital Markets Champion. Woolard, a former interim chief executive of the FCA and now a partner at EY, will lead work on building a more tokenised wholesale financial markets system and help coordinate industry implementation of the government’s digital markets strategy.

The package also includes an additional £1m of funding for the Centre for Finance, Innovation and Technology from April, and confirmation that the government is proceeding with plans to absorb the Payments Systems Regulator into the FCA.

Economic secretary to the Treasury Lucy Rigby said the measures were intended to build “a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change.”

The practical sequence of events now matters as much as the policy direction. The consultation on payments and electronic money reform is due shortly, further stablecoin legislation is to follow, new open banking powers are planned for the FCA, and Woolard’s appointment takes effect immediately as the government pushes ahead with tokenisation in wholesale markets.

 

Nordic firms scale AI but value still lags

AI adoption is accelerating rapidly across Nordic businesses, but many organisations are still struggling to turn that activity into measurable commercial value, according to a new survey from Tieto. The study, which covered 623 AI-related decision-makers in Finland, Sweden and Norway, found that 31% of organisations now have AI in production across the business, up from just 7% a year earlier. At employee level, usage is already widespread: 30% of respondents said staff use AI tools to a large extent, and every respondent reported at least some level of AI use. Nearly three in 10 organisations, or 29%, have also started experimenting with their own customised AI agents.

Differences between the countries in the region are clear. Sweden is furthest ahead, with 39% of employees using AI extensively, compared with 26% in Finland and 23% in Norway. Across the region, the heaviest use remains concentrated in IT operations, cited by 46%, followed by customer service and software development, both at 35%.

Efficiency is still the dominant reason companies are investing. Some 65% said it is the main driver for AI adoption, while 35% pointed to operational modernisation, 32% to cost reduction and 27% to customer experience.

Measured impact, however, looks narrower than the scale of adoption might suggest. Productivity, cited by 33%, and cost savings, at 31%, are the most common key performance indicators. Yet 24% of organisations still have no formal AI KPIs at all. Norway stands out here, with 31% reporting no KPIs, compared with 17% in Finland.

That gap between rollout and measurement is likely to resonate with finance teams trying to assess where AI is genuinely improving returns and where investment is still being justified more by momentum than evidence. It also suggests many firms remain better at deploying tools than at embedding financial discipline around them.

Security and data privacy remain the biggest obstacles to wider adoption, cited by 45% of respondents. Skills shortages come next at 39%, underlining that the constraint is not just technical capability but organisational readiness.

“Secure solutions are entirely achievable when AI is deployed in a controlled way and integrated into the organisation’s operating models,” noted Jutta Karjalainen, AI expert at Tieto Tech Consulting.

Governance is still uneven. About one-third of respondents said their organisation has policies or guidelines in place for responsible AI use. Norway recorded the highest share of completed policies at 38%, while Sweden had the largest share of respondents who were unsure whether such policies existed, at 16%.

Methodologically, the survey reflects the views of IT decision-makers in medium-sized and large organisations rather than the workforce as a whole. Even so, the findings point to a more mature phase of AI adoption in the Nordics, where the challenge is shifting from experimentation to proving value, tightening controls and building the skills needed to scale safely.

 

Goldman Sachs sees scope for higher equity volatility

Equity market volatility could stay elevated over time even if share prices continue to rise, according to Goldman Sachs Research, which argues that uncertainty around AI valuations may become a more important driver of market swings.

The note comes after recent volatility gauges such as the VIX moved sharply in response to changing sentiment around the Iran conflict. But Vickie Chang of Goldman Sachs Research said the bigger issue may be what happens once investors move beyond short-term geopolitical shocks and start reassessing how much future AI gains are already priced into equities.

“We think this is an environment where equity volatility could rise over time, even if stocks rally,” Chang said.

That matters because volatility does not always fall when markets rise. Chang points to the late 1990s as a period when equity prices and volatility moved higher together, supported by rising valuations, higher leverage and uncertainty around the long-term effects of technological change.

“Today’s equity market is similarly driven by hopes of innovation-led productivity gains,” she said.

The implication is that markets may remain more sensitive to changing assumptions about earnings, productivity and the commercial payoff from AI, even without a broad risk-off shock. For treasury and finance teams, that raises the prospect of more unsettled equity conditions feeding into funding markets, hedging decisions and the pricing of risk.

Chang said investors are likely to spend more time testing whether the expected benefits of AI justify current market valuations. “That means volatility should rise, both under the surface of the market and eventually at the index level, as investors work through that uncertainty,” she said.

She also noted that volatility could rise for more conventional reasons if the economic outlook weakens materially, suggesting the market faces more than one potential source of instability in the months ahead.

 

Lords committee urges UK to build bigger fiscal buffers

A House of Lords committee has urged the government to stop treating fiscal headroom as money available to spend and instead operate with larger buffers to reduce the risk of repeated last-minute policy adjustments. In a new report, ‘Fortifying the fiscal framework’, the cross-party Economic Affairs Committee said the UK’s current fiscal rules can technically be met without delivering any meaningful long-term reduction in debt. To strengthen credibility, it said the government should add a further commitment requiring debt in the third year to be lower than in the first year in normal times.

The committee also argued that running with only a narrow margin against the fiscal rules encourages markets and policymakers to focus too heavily on the headroom figure itself. That can fuel speculation over tax or spending changes needed to stay compliant, especially when the Office for Budget Responsibility’s forecasts are subject to unavoidable errors.

“The UK’s fiscal framework is frail,” noted Lord Wood of Anfield, chair of the committee. “The Government’s behaviour must change with significantly larger fiscal buffers becoming the norm and these buffers not being used as a piggy bank that can be ‘raided’.”

A second concern in the report is the repeated rewriting of the rules. The committee said frequent changes have weakened the credibility of the framework and warned that any future revisions should only be made after a full consultation process held outside periods of active political campaigning.

The report also defended the role of the OBR, rejecting claims that it constrains government policy. Instead, the committee said the watchdog improves transparency by assessing compliance with rules ministers have set for themselves. It added that if governments believe in the value of particular policies, they should implement them and allow any positive effects to show up in later forecasts.

On process, the committee said the OBR should continue producing two forecasts a year, but recommended moving the timing of the spring forecast so the gap between forecast events is closer to six months. That, it argued, would reduce pressure on ministers to announce policy changes at the Spring Statement.

 

ION rolls out EU payee verification across treasury tools

ION Treasury has introduced Verification of Payee capabilities across its treasury products, as corporates and payment providers adapt to a new EU requirement that changes how SEPA credit transfers and instant payments are checked before execution. The rule, part of the EU Instant Payments Regulation adopted in 2024, requires payment service providers and corporates to verify that a beneficiary’s name matches the associated IBAN before processing relevant payments. That adds a new control layer to payment workflows and gives treasury teams another operational step to manage in day-to-day execution.

ION’s ITS system was the first product in its treasury portfolio to go live in production under the new framework, allowing customers to comply without adding manual workarounds or disrupting existing processes. The company added that clients are already processing high volumes of payments under the new rules.

The practical significance of VoP is that it moves beneficiary checking from a best-practice control to a regulated part of payment processing. That raises the operational burden for treasurers, particularly where payment runs are high-volume and time-sensitive, but it also strengthens payment validation and fraud controls at a point when misdirected and manipulated payments remain a live concern.

ION worked with KPMG Germany on implementation, with the advisory firm supporting customers on rollout and adoption across multiple organisations. ION said it retained responsibility for the underlying product capability and regulatory alignment.

Germany was the first market to implement VoP under the regulation, making it an early test case for how banks, treasury systems and corporates can adapt to the new process. As the requirement spreads across Europe, treasury teams are likely to face a broader shift in payment operations, with beneficiary verification becoming a routine part of SEPA processing rather than an optional safeguard.

 

BNP Paribas AM launches euro government MMF

BNP Paribas Asset Management has launched a new euro-denominated government money market fund (MMF), adding another option for investors seeking high-quality short-term liquidity management amid continued demand for capital preservation.

The BNP Paribas InstiCash EUR Government CNAV SICAV is structured as a public debt constant net asset value money market fund and is rated AAA by Fitch Ratings. According to the firm, it will invest at least 99.5% of its assets in public debt instruments.

The fund is designed to support day-to-day cash management with a stable net asset value of €1.00, alongside a variable net asset value, high daily and weekly liquidity buffers and an amortised cost valuation method. BNP Paribas Asset Management said it aims to deliver a euro return in line with prevailing money market rates over a one-day period, while preserving capital and maintaining diversification.

“There continues to be investor appetite for high-quality, low-risk solutions for day-to-day cash management,” commented Marc Fleury, head of liquidity solutions at BNP Paribas Asset Management. “The CNAV fund can potentially provide a safe haven for investors seeking to preserve capital and maintain liquidity.”

The launch also expands BNP Paribas Asset Management’s broader liquidity solutions range, which the firm said totals €170bn. In practical terms, the new fund adds to the pool of short-term euro cash options available to institutional investors looking to manage surplus liquidity through sovereign-backed instruments.

 

FedNow adds network data tool to strengthen instant payment checks

Federal Reserve Financial Services is launching a new network intelligence API for the FedNow Service, giving participating financial institutions and service providers a new source of account-level data to assess risk before sending instant payments.

The tool becomes available on 28 April for early adopters and is designed to add network-level intelligence to firms’ existing fraud and risk controls. Rather than relying only on their own internal data, users will be able to draw on receiver account activity observed across the FedNow network when deciding whether to proceed with a payment, hold it or route it for further review.

That matters because fraud controls in instant payments are most effective before a transaction is sent, not after settlement. The API is intended to help users make those decisions in real time, while still fitting into existing systems through an application programming interface.

The Federal Reserve said the tool uses historical data to improve its insights over time and can also support customer-facing payment journeys, including additional messaging around higher-risk transactions.

The API has been tested by FedNow participants since last autumn. It now joins the wider suite of FedNow fraud and risk management features, with the service also exploring easier use of payee name verification for real-time payment flows.

“Being able to enrich transaction data before fraud review is a tremendous benefit of employing the network intelligence tool,” commented Tede Forman, president of payment solutions at Jack Henry, one of the organisations involved in testing the API. “You gain additional data related to the transaction, leading to greater visibility and a more secure payment network.”

 

Modern Treasury adds identity layer through Persona tie-up

Modern Treasury has partnered with Persona to expand its business onboarding and compliance capabilities, as payment firms face more complex verification demands across jurisdictions, rails and customer types. The partnership adds Persona’s identity verification and know-your-business workflows to Modern Treasury’s existing payments infrastructure, which already includes compliance controls, rail connectivity, account infrastructure and ledgering.

The aim of the partnership is to give customers more flexibility in how they screen legal entities and onboard businesses without relying on separate tools or manual workarounds. That matters because onboarding is becoming a more strategic part of payment operations. As payments become more embedded in software and AI lowers the barrier for fraud and impersonation, firms need verification processes that can adapt to different geographies, use cases and regulatory requirements without constant redesign.

According to the companies, the combined setup is intended to reduce manual reviews, speed onboarding across markets and customer segments, and keep onboarding, payment and ledger data aligned and auditable. The tie-up also broadens the compliance stack around Modern Treasury’s payment service provider offering, which supports products built across ACH, wire, RTP, FedNow, push-to-card and stablecoins.

 

SMBC launches transaction banking platform for US clients

SMBC Americas has launched a new transaction banking platform for US clients, adding cash management and payments capabilities under the SMBC Connect brand as it builds out a broader offering for global treasury operations. The initial rollout includes an online banking portal, with additional services due to be introduced progressively across North America. The bank said the platform is intended to support payment execution, liquidity management and visibility across client operations.

Transaction banks are increasingly looking to modernise corporate banking interfaces around the needs of treasury users rather than legacy product silos. SMBC said the platform is being developed with input from corporate treasurers and is designed to expand beyond traditional transaction banking tools over time.

Planned features include more integrated control and security processes, including AI-supported tools aimed at helping firms manage fraud risk. The bank also said it is building personalisation features to provide real-time insights tailored to different user roles across regions, alongside greater transparency through real-time tracking for payments, including cross-border transactions.

Efficiency is another focus. SMBC said the platform will include global single sign-on, transaction tagging and other tools aimed at improving cash use and streamlining payment workflows.

The move supports SMBC Group’s three-year strategic plan, which identifies global transaction banking as a growth area. For treasury teams, the practical significance lies in whether the platform can deliver clearer visibility and more consistent control across day-to-day cash and payment activity as its functionality expands.

 

Nium adds USDC payments through Coinbase tie-up

Nium has partnered with Coinbase to add USDC stablecoin payments to its cross-border payments platform, giving clients a way to send, receive and convert stablecoins alongside traditional fiat transactions.

The integration is already live, with Coinbase providing the stablecoin payments infrastructure, wallet services and custody. Nium said clients can now use USDC for payouts and convert stablecoin balances into fiat, allowing businesses to manage both on-chain and conventional payment flows through the same platform.

The practical significance lies in liquidity management. Nium said the arrangement is designed to help clients move away from capital-intensive prefunding models and towards more just-in-time funding, using stablecoins to support settlement and then converting into local currency at the point of payout. That matters for banks, fintechs and multinational firms trying to reduce idle balances across payment corridors while still maintaining flexibility over how and when funds are deployed. Nium said the offering is available across its network spanning more than 40 licences and more than 190 countries.

The partnership also opens up a second use case beyond cross-border payouts. Businesses holding stablecoin balances will be able to use them to support card programmes, extending stablecoin-linked spending into everyday merchant payments.

 

Aurionpro launches AI-native trade finance platform

Aurionpro has launched Fintra, an AI-native trade finance platform aimed at automating document-heavy workflows while keeping human oversight in place for higher-risk decisions. The platform is designed to handle tasks such as document processing, compliance screening, clause recommendation and risk scoring, with integration into Swift, general ledger and limits management systems. Aurionpro said the operating model is built around specialised AI agents, while bankers retain control over judgment, approvals and governance.

That focus reflects a long-running friction point in trade finance, where processes remain heavily manual and error-prone. Aurionpro cited International Chamber of Commerce estimates that 70% of trade finance presentations are rejected on first submission, underlining the scope for automation in document checking and workflow handling.

A central feature of the platform is what the company calls a Confidence-Gated Handoff Protocol, which assesses factors including confidence, materiality, regulatory requirements and novelty before routing decisions to a human user. Aurionpro said all decisions are logged and reasoning chains are fully auditable.

Fintra is the first product built on Aurion AI, the company’s broader banking software stack, with further platforms planned in corporate lending, retail lending, transaction banking and supply chain finance.

 

Enfuce joins Mastercard programme for European business cards

Enfuce is joining Mastercard Product Express in Europe, extending the platform’s card-launch infrastructure to support business card programmes for banks, fintechs and non-financial firms. The move adds business card issuance to Mastercard’s Product Express offering in the region, with Enfuce acting as a certified partner on the platform. Mastercard said Product Express is built to simplify card launches through pre-integrated partners, standardised processes and streamlined onboarding.

Enfuce’s role will be to support programme launches through its card issuing and processing technology, including virtual card issuance, spend controls and support across debit, credit and prepaid products.

Business cards are becoming more central to expense management, procurement control and working capital visibility, but rolling them out across multiple European markets can still involve significant regulatory, technical and integration complexity. By bringing Enfuce into the Product Express framework, Mastercard is widening the set of pre-configured options available to firms that want to build or expand business card offerings without assembling the infrastructure from scratch.