Markets seem to underestimate threat of Brexit: ECB's Rehn

BERLIN (Reuters) - The risk of Britain leaving the European Union without a deal is the biggest risk facing the slowing euro zone economy in the short term, Finnish central bank chief Olli Rehn told Germany's Die Welt newspaper in remarks published on Monday.

"In the short term Brexit is surely the biggest threat," said Rehn, who sits on the European Central Bank's rate-setting Governing Council. "Financial markets seem to be too relaxed and appear to underestimate the risk."

He said the ECB had made arrangements with the Bank of England to blunt turbulence in the case of a disorderly Brexit.

Asked about the risk of recession in the euro zone, Rehn -- who is often mentioned as a potential candidate to succeed ECB President Mario Draghi -- said: "Growth has indeed slowed down significantly and we must be worried about the economy."

(Reporting by Joseph Nasr; Editing by Kirsten Donovan)

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