Brexit negotiator David Frost (left) ruled out seeking an extension earlier this week. (Getty)

Extending the Brexit transition period could mean the UK has to pay out for the EU’s response to the coronavirus crisis, it has been revealed.

The government refused earlier this week to seek an extension from the EU citing fears it could leave the UK liable to “pay more into the EU in future”.

A source told The Sunday Telegraph, however, that the decision was partly based on a concern that the EU will demand "massive" payments to help deal with the impact of the Covid-19 pandemic.

It comes as EU beaurocrats are set to agree a new seven-year budget which will see more grants paid out by member states in the first few years of the cycle.

It's feared the UK could be forced to pick up the tab for the EU's coronavirus bill if the transition period is extended. (Getty)

A source close to the negotiations said the changes to the budget are likely to be aimed at helping countries recover from the economic effects of coronavirus, and could see the UK liable for payments.

“It’s clear the EU will be increasing their budget, and bringing in all kinds of packages to deal with the consequences of the Covid 19 crisis,” they said.

Latest coronavirus news, updates and advice

“Paying into this new budget when we are no a longer member state and without a say is clearly not in the national interest.

“We need to spend money on our own needs in our own way."

A Downing Street spokesperson said earlier this week: “We will not ask to extend the transition period, and if the EU asks we will say no.”

While David Frost, Britain's chief negotiator tweeted: “Extending would simply prolong negotiations, create even more uncertainty, leave us liable to pay more to the EU in future, and keep us bound by evolving EU laws at a time when we need to control our own affairs.

“In short, it is not in the UK's interest to extend."

The government’s decision to rule out extending the transition period was hailed by some MPs earlier this week.

Story continues

North West Leicestershire MP Andrew Bridgen said: “Circumstances have changed. The UK taxpayer now has a major bill to pick up to pay for the coronavirus aftermath.

The EU is set to introduce sweeping budgetary changes in the coming days. (Getty)

“We cannot afford to pay huge sums of money to a dysfunctional organisation which we are no longer part of.

“The government needs to look at this again particularly if the EU fails to conclude an acceptable trade deal with us we should be paying nothing."

Former cabinet minister David Jones said: “It is good that David Frost has confirmed the transition period will end on 31 December.

“The government has said it will pay what is due but we should not pay a penny more.”

However, Liberal Democrat MP Layla Moran tweeted: “Govt has a window to extend the transition period. Why on earth would they not do so?

“We should be pointing our resources to coronavirus and saving lives, not an economically devastating no-deal Brexit.”

Coronavirus: what happened today?

Click here to sign up to the latest news, advice and information with our daily Catch-up newsletter