The clouds darkened over Europe’s slowing economy on Wednesday as the German government slashed its growth forecast and said concerns about a chaotic Brexit and trade tensions were holding back the continent’s powerhouse.

Germany’s Economy Ministry said Wednesday it was cutting its 2018 forecast to 1.0 percent from 1.8 percent in its previous outlook issued last fall.

Economy Minister Peter Altmaier said that while the German economy would grow for a 10th year in a row, “the headwinds, primarily from the external environment, are increasing.” He cited Brexit and trade conflicts as key issues.

German businesses are unsettled about the possibility that Britain will leave the EU without agreeing on trade rules for a transition period. New import taxes imposed by the U.S. and China are also weighing on prospects for global trade. That hurts the outlook for Germany because the country is a major exporter.

Germany’s economy grew 1.5 percent last year and 2.2 percent in 2017. Growth was also held back by automakers’ troubles getting vehicles certified under new, tougher emissions tests.

Unemployment is low and wages are rising, thus far helping to keep the economic upswing going. But measures of industrial activity have sagged in recent weeks. Growth has been disappointing in Italy, where the central bank has indicated the country likely slipped into a recession, defined as two straight quarters of declining output, at the end of last year.

European Central Bank head Mario Draghi said this month that risks for the 19 countries that use the euro currency have “moved to the downside,” leading to speculation the bank could postpone raising interest rates from current record lows. The bank has said rates will stay at current lows at least “through the summer.”
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