The failure to reach a deal is widely expected to be economically damaging to both sides of the negotiating table.
But France, Belgium, the Netherlands and Denmark will come off worse than Britain according to Mr Davis, as the UK will do business under World Trade Organisation rules.
Member states do not understand the importance of trading with the UK, he said.
But he added: “All of them know that the impact of no deal would be quite dramatic, more dramatic than for us.”
After insisting he did not want a no-deal scenario, Mr Davis went on to suggest to MPs such an outcome would not be “a catastrophe.”
He added: “Sometimes they have to remember they are negotiators, not arbiters.
“The interests in those other countries is as much engaged in having a deal as ours is and that’s what will drive it in the end.”
The commonly held view is that the UK will be hardest hit by WTO regulations, as about 40 per cent of Britain’s exports go to the EU.
However the Brexit Secretary said his discussions in Brussels revealed other members are keen to ensure a deal is agreed – particular “the North Sea littoral” of the Netherlands, Belgium, France and Denmark.
Taking questions in the House of Commons yesterday afternoon, Mr Davis also updated his colleagues on the negotiations process – including the divorce settlement Brussels is demanding.
He said “significant differences” remained between the UK and the EU on Britain’s financial obligations.
And talks on the so-called Brexit bill would go on “for the full duration of the negotiation” – and could still end in the UK failing to agree on the EU’s “legal basis” for the bill
The Government is still embroiled in discussions over how big the bill for leaving the bloc will be, leading to delays in thrashing out a deal on trade.
Theresa May is now reportedly considering ramping up the negotiations, switching from one round of talks a month to a rolling week-by-week format.
But Mr Davis’ comment last night come as leading Eurosceptics call for the Prime Minister to back her early stance on negotiations when she warned “no deal is better than a bad deal”.
MP John Redwood told the Financial Times the slow-moving nature of the negotiations were no surprise and the EU often left vital decisions until “the very last moment”.
He said: “I’m quite relaxed. We can trade perfectly well under World Trade Organisation rules.”