General Electric announced on Thursday it was axing 12,000 jobs at its global power business as the struggling industrial conglomerate responds to dwindling demand for fossil fuel power plants.

The U.S. company launched the cuts to save $1 billion in 2018, saying it expected current difficulties in the sector to continue.

"Traditional power markets including gas and coal have softened," GE said.

Rumors of sweeping job cuts were confirmed by labor union sources on Wednesday, with staff in Switzerland and Germany among those badly hit.

"This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services," said Russell Stokes, head of GE Power.

"Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond."