UPDATE 1-Czech government boosts business aid as COVID-19 measures bite

(Recasts with government help, new measures in place)

PRAGUE, Oct 14 (Reuters) - The Czech government approved a relief plan on Wednesday for restaurants and businesses hit by a spate of new closures and restrictions to curb a sharp increase in COVID-19 cases.

The country of 10.7 million reported more than 8,000 new daily coronavirus cases for the second time as the spike in infections has jumped fivefold since the start of September, to a total 129,747 as of Tuesday.

Hospitalisations have doubled to 2,503 since Oct. 4 and deaths have climbed by over 400 to 1,106 this month, pushing the state to shut restaurants, bars and clubs starting from Wednesday while limiting public gatherings and shifting schools to remote learning.

The tighter measures enacted followed closures of theatres, cinemas and sport centres earlier this week.

The government is extending part of its wage subsidy programme, which includes increasing the amount of salaries it will cover at firms hit by measures.

It will also allow some tax deferrals for companies like fitness centres and pubs.

The government set aside 1.2 billion crowns ($51.7 million) in rent relief for affected businesses, 1 billion crowns for aid to bus operators, 750 million crowns to support businesses in the culture sector, and 500 million crowns for sports groups and organisers.

The government, which has approved a 500 billion crown budget deficit this year and has recently said the final result would be below that, has sought to avoid a full lockdown like that in the spring when the shuttering of most retail businesses helped push the economy into a record contraction.

Economists predict the new measures, expected to stay in place until Nov. 3, will cause the economy to shrink on a quarterly basis this quarter.

ING economist Jakub Seidler forecast a 1.5% fourth-quarter decline, revised from an earlier prediction of 2.5% growth. He said the end-of-year hit could cause a 7.5% full-year contraction, down 1 percentage point from an earlier outlook. ($1 = 23.2260 Czech crowns) (Reporting by Jason Hovet and Michael Kahn)