The value of the euro has plunged ahead of a crunch deadline for Italy to amend its rejected budget plan.
Reportedly, Giovanni Tria, the finance minister of Italy, is set to revise the growth forecast of the budget in order to attain a compromise with the European Commission.
However, the currency has fallen to 0.6 percent against the dollar to $1.126. It resulted from a decline in the value of the pound as well as political uncertainty.
In a deadline that was imposed by the bloc, the government of Italy has until tomorrow to submit a revised draft budget plan to the European Commission.
It could trigger disciplinary measures which could likely include fines against Rome later this month once a new budget that would meet its rules does not come forward.
Last month, the European Commission rejected the budget plan of Italy. It said that it has breached the rules of the European Union. It has been the first rejection of a fiscal plan of a member state.
The European Union said that the government spending was too high and the deficit would increase instead of decline and the debt would not fall in line with the rules of the bloc.
Last week, the commission presented its own economic forecast, which contradicted the predictions of Italy that were included in its budget.
The commission predicted that the budget of Italy would push its deficit to 2.9 percent of GDP next year, rather than the 2.4 percent that was estimated by Rome, and that it would increase to 3.1 percent in 2020 against the estimates of 2.1 percent of Italy – which is above the limit of the bloc.
Its forecast that amounted to a GDP growth of 1.2 percent next year was also lower than the 1.5 percent that was forecasted by Italy.
Citing a source from the government, La Repubblica, an Italian newspaper, reported that Italy could now revise its forecast for its GDP growth for next year to one percent, while Il Messaggero, another newspaper, said that it would be revised down to 1.2 percent.