Denmark did not specify what the money would be used for, but hinted their financial contributions to the EU would go up.
Finance minster Kristian Jensen said: “We have a reserve pool of 700million crowns to meet problems that may arise if Brexit ends with no deal or a situation where Britain doesn’t live up to the obligations they have.
“It will be used when we know the consequences of the Brexit negotiations.”
Mr Jensen doesn’t know what the actual cost of a hard Brexit would be for the entire Danish economy.
But he added: “It will mean a great deal. There’s no way around that.”
Denmark’s financial contributions to the European Union are expected to total £2.65billion (22billion crowns) in the event of a hard Brexit.
However, Mr Jensen says costs could sharply increase if there is no deal and Denmark will be paying more every year until at least 2022.
He said: “We don’t expect Brexit to materially impact the 2019 budget structurally, so the budget will be stable and reliable.
“But what actually will happen is the our payment to the EU may change if we get a hard Brexit.”
His Brexit gloom comes as the Brexit Secretary Dominic Raab and EU’s chief negotiator Michel Barnier announced there was a breakthrough in negotiations.
Mr Raab said a deal is “within our sights” amid reports of growing tensions between Brussels and the UK government.
He told the House of Lords’ EU Committee said: “I’m confident that a deal is within our sights.
“We’re bringing ambition, pragmatism, energy and if, and I expect it will be, and if it is matched, we get a deal.”
Mr Barnier said the EU was prepared to give the UK a deal like “no other third country”.
These recent speeches shut down Project Fear voices over the possibility of leaving the EU without a deal, but Prime Minister Theresa May has said the UK would be fine in the event of a no-deal Brexit.
Mrs May has insisted the UK can deal with a no-deal Brexit saying it “wouldn’t be the end of the world”.
She added: “What the Government is doing is putting in place the preparations such that if we are in that situation we can make a success of it.
“Just as we can make a success of a good deal.”
For the Danish government, Mr Jensen hinted that the the biggest cost could be the loss of a key political ally in Brussels.
He said: “Throughout 2019 and maybe in 2020 we’ll be negotiating the EU budget for years to come and we’ll be missing the voice of the UK when advocating responsible spending.”