Akzo Nobel, the Dutch owner of ICI, the paint and chemicals company, plans to cut 3,500 jobs to try to save more than €100 million (£79.7 million).

The company, which bought the maker of Dulux paints for £8 billion in January, said that it was taking aggressive action to cope with a fall in consumer demand for its products.

Hans Wijers, chief executive, said that Akzo Nobel had faced a “tsunami of raw material price rises” in the past year and was being forced to pass price rises on to consumers.

The world's biggest paints company employs 43,000 people in more than 80 countries, including 4,500 in Britain in its coatings and paint divisions. Its plants are located in Tyne & Wear, Leicester, Worcestershire and Slough.

Mr Wijers said that the job cuts would be made across the decorative paints business and then mainly in North America and Europe and should be completed by 2011. He added: “In these challenging markets, only lean companies succeed. We have, therefore, started a rigorous drive to reduce our cost base.”

As well as a slowdown in both the United States and Britain, Mr Wijers said that there were clear indications of a slowdown in Southern Europe, Germany and in some emerging markets. The group's share buyback will also be deferred because of the uncertainty in the financial markets.

Keith Nichols, Akzo's chief financial officer, said that the company had to refinance debt that involved an €800 million bond due to mature in December and another €1 billion that matures in May 2009, including some debt inherited from ICI.

However, he told analysts that Akzo had simply decided to wait for better refinancing terms to emerge and was not unable to refinance its debt.

Analysts reacted negatively to the announcement. Danny van Doesburg, at SNS Securities, said: “This is clearly a panic reaction, but with the strong cashflow and with the very low debt profile of this company, I think it should be possible to refinance as soon as markets are in calmer waters.”

Mutlu Gundogan, of RBS, said in a note to clients: “Our conclusion is that Akzo is taking the right corrective measures, but that this will not offset the impact of a difficult trading environment.”

The company's shares closed down €2.75, or 7.75 per cent, at €32.75 in Amsterdam.

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