Britain must not cave in to EU demands for a bigger Brexit divorce bill after Brussels set a two-week deadline for the UK to concede, allies of Boris Johnson have warned.

Michel Barnier, the EU’s chief Brexit negotiator, on Friday said Britain must show “real and sincere progress” on the Brexit bill if it wants to break the deadlock by the end of the year.

It comes amid reports that Theresa May is preparing to increase the UK’s offer to the EU after Brussels said that the €20 billion (£18 billion) she has already committed was not enough. The EU wants at least €60 billion.

The Foreign Secretary, who has previously said that the EU can “go whistle” if it wants a huge divorce bill, is understood to believe that the UK must hold its nerve ahead of the December summit. An ally of Mr Johnson said: “You don’t pay your bill at a restaurant halfway through, you pay at the end. That’s sensible business.”

Sources close to the British negotiations on Friday night warned the EU that Brexit negotiations will “collapse” if it does not take a more reasonable approach to talks.

Tory Eurosceptics have warned the Brexit divorce bill is “critical” and that the UK cannot afford to give any more ground. Iain Duncan Smith, a Tory MP and former Conservative leader, told The Telegraph: “They think we blinked in Florence and now they believe we will blink again. We must not blink.