In November both Italian consumer and business confidence declined. The composite business confidence climate index weakened from 102.5 points to 101.0 with all sectors but retail showing a decrease in sentiment. Meanwhile the consumer confidence index fell from 116.5 to 114.8, driven by declines in the economic, current and future components of the survey. However, sentiment increased in the personal component which includes an assessment of saving intentions and the family budget. While businesses have become decidedly less optimistic in recent months, consumer confidence still registers close to an all-time high. This optimism may reflect the expected impact of the fiscal measures put forward in the 2019 budget draft. However, the Italian consumer is in for a rude awakening: We expect GDP growth to slow to +0.6% in 2019 after +1% this year. As the favorable labor market trend comes to a halt and elevated yields on government debt increasingly feed through to the private sector, confidence and in turn support for the government’s imprudent fiscal agenda may well fall sharply.