The number of people unemployed or on sick pay has effectively doubled overnight to over 10% of the labour force, and could rise again, with implications for Government budget spending, if the Covid-19 emergency measures extend through the summer, leading economists and business groups have estimated.

The huge toll of the virus emergency has soared since the weekend, as 140,000 people were put on sick leave yesterday — including 20,000 childcare workers, 50,000 pub staff, and 70,000 staff in restaurants, cafes, and other food outlets.

That compares with the 120,100 people, equivalent to 4.8% of the labour force, who were unemployed last month.

UCC economist Seamus Coffey — the former Chair of the Irish Fiscal Advisory Council — said the unemployment rate could likely rise to 10% if the emergency and partial lockdown extends through to mid-summer.

However, Mr Coffey said the rebound in consumption and the economy will likely be significant once the measures work effectively to limit the spread of the disease.

ESRI research professor Kieran McQuinn said the measures announced by the Government, “while completely necessary from a general health perspective”, will likely result in a significant increase in unemployment in certain key sectors of the domestic economy.

“In particular, the retail trade, along with the accommodation and food service sectors, will almost certainly see a substantial increase in the numbers out of work over the coming weeks and months,” said Mr McQuinn.

There were 180,000 people working across accommodation and food services in early 2020. That implies the jobless rate could rise again should more severe measures be called for.

UCC economist Declan Jordan said the increase in unemployment will depend on the “how drastic the lockdown becomes”.

“I would be worried if I was in construction, retail, or any service industry, really, that can’t go online. Even though there is demand, if shops were to shut down, that demand cannot be satisfied,” he said.

Mr Jordan said the crisis had come at a difficult time for the Government’s finances. But the right thing to do was for the Government to spend on health controls and social supports regardless of the EU spending constraints, he said.

“Even if we break the rules, we should go ahead. What the Government is doing to support people who have been laid off is right,” said Mr Jordan.

Experts agree that three of the Government’s big four tax sources will be hit by the crisis.

Last year, the Government collected almost €23bn in income taxes, over €15bn from Vat revenues, and just short of €6bn in excise duties.

Mr Jordan said the Government needs to go further and announce all sorts of tax payment holidays, including temporary freezes on business remitting Vat payments and their payroll taxes, as well as freezing the payment of commercial rates for at least two months.

Moreover, payments by the Government on contracts to private firms should be paid at once, he said.

Business groups have stepped up their warnings about a liquidity trap as their cash flow dries up.