BUSINESSES face a "climate of fear" over voicing concerns about Scottish independence in case they are singled out, the leader of Scotland's largest council has claimed.

Gordon Matheson, leader of Glasgow City Council, also raised fears for the local tourism sector in the event of a "yes" vote in the independence referendum, claiming the conference sector alone faced losing tens of millions a year.

Appearing before the House of Lords Economic Affairs Select Committee, meeting in the city, the council leader said heavy industry would suffer, again claiming jobs would be lost in shipbuilding with the UK Government moving defence contracts elsewhere.

However, the SNP has dismissed the claims as scare-mongering, pointing out that Glasgow's main competition for conferences is other European cities such as Barcelona and Dublin and not other UK destinations.

It comes as the city council launches a study on what the financial impact on the council would be in the event of Scotland becoming an independent nation-state. The authority said that as independence would have a significant impact on the economic environment which local government operates in, it should examine how that "would affect its ability to provide services, should Scotland secede from the UK".

The Lords Economic Committee has been conducting an investigation into the economic consequences for the UK should Scotland become independent.

Speaking outside the meeting, Mr Matheson said: "There is a climate of fear among businesses in the city. Many companies have told me directly that the uncertainty of constitutional change is having a negative impact on their business.

"However, the current political climate has made it almost impossible for companies to voice their concerns about Scottish independence, for fear that they will be singled out.

"Independence would have a massive impact on employment in Glasgow. Four thousand jobs at Glasgow's shipyards would be lost, given the inevitability of the departure of significant employers such as BAE Systems. Thousands of jobs reliant on hospitality and tourism would be put in danger.

"One of my greatest concerns is the potential collapse of our business tourism sector. This is worth hundreds of millions of pounds each year to Glasgow and the majority of this business comes from the rest of the UK. Let's be clear, UK organisations do not hold UK conferences outside the UK. The consequences for local jobs in this area would be disastrous."

Glasgow SNP Group leader Councillor Graeme Hendry said: "For the leader of Glasgow City Council to have so little confidence in Glasgow beggars belief. If there is a 'climate of fear' as Mr Matheson claims, it is the responsibility of Mr Matheson and his allies in the Tory-led anti-independence campaign."