The European Union threatened to decrease aid to Egypt in case President Mohamed Morsi insisted on implementing his controversial constitutional decree, a senior member of the EU Parliament told German newspaper Frankfurter Rundschau.
"If Morsi chooses the road of dictatorship then the funds pumped into the Egyptian market will be less," Elmar Brok, head of the EU Parliament's foreign affairs committee, said.
Critics of Morsi's declaration have organised a protest on Tuesday in Cairo's Tahrir Square and in other Egyptian governorates.
On Thursday, Morsi issued a decree that angered many Egyptian judges, many of whom saw it as a violation of judicial independence.
According to Morsi's decree, the president's decisions cannot be overturned by any judicial authority.
The decree also replaced Egypt's prosecutor-general, which Morsi had tried – and failed – to do last month.
Earlier this month, the European Union approved a 5 billion euro ($6.3 billion) 'support package' to Egypt, to be disbursed through European financial institutions over a two-year period.