Friends First economist Jim Power has predicted that there will be 350,000 people on the Live Register by the end of next year due to a rapid and massive deterioration in labour market conditions.
In his latest economic outlook, he said Ireland's overdependence on the construction sector meant that any recovery from the global downturn would be slower and more painful than necessary.
The economist estimated that house prices had fallen by 35% since the middle of 2006 and could drop by another 10% by mid-2009. He said further interest rate cuts of up to 1.5 points over the next 12 months were a positive, but were unlikely to stimulate a significant property recovery.
Mr Power said the economic assumptions underlying the Budget were 'way too optimistic', and called for a public sector pay cut of up to 10% for those on more than €50,000 a year.
Mr Power said consumers' contribution had been waning dramatically over recent months, while the worldwide downturn would also put pressure on exporters. He said the euro's strength against sterling was exacerbating pressures on exporters.
