"Refusing the idea of building big European Champions by consolidation could be a mistake," Scholz said in a keynote speech at the London School of Economics.

"Sometimes size matters," he said in response to a question about the tie-up between Alstom and Siemens, which was blocked by the EU regulators, scuppering efforst to create a European rail champion.

Asked about the European Commission's sharp revision of economic growth rates across the block, Scholz said this was "not a catastrophe"

"There is a slowdown, but it is still growth...after many years of growth it is just something that happens," he said.

(Reporting by Karin Strohecker, editing by Abhinav Ramnarayan)