BASF, the Germany-based chemicals group, will cut output by 25 per cent and reduce the working hours of 20,000 of its staff for the next two months, as the effects of the credit crunch continue to affect the real economy.

Jürgen Hambrecht, chief executive, said the world’s largest chemicals group was “preparing for tough times” as he issued BASF’s second profit warning this year. He warned it was “difficult to foresee” what 2009 would bring given mounting economic woes.