First Group has announced plans to cut 3,500 jobs – representing 3 per cent of its cost base – over the next year in one of the most drastic responses yet by a bus and rail group to the economic downturn.

The shares jumped almost 21 per cent, or 43¼p, to 252½p on the statement, which said a £200m savings programme and increases in ticket revenue would help the company achieve its financial targets in 2009-10.