TESCO has denied claims its prices would rise in an independent Scotland.

It called the suggestion in a pro-Union Better Together campaign leaflet "entirely speculative".

A spokesman for the supermarket giant said the company was "neutral on the referendum" which was "a matter for the Scottish people."

It released the statement after pro-Union literature used Tesco prices in Ireland to suggest that shopping in Scotland could cost 16 per cent more after a Yes vote.

Labour MSP Jackie Baillie, speaking on behalf of Better Together, also said a Yes vote would "cost families in Scotland dear". But in a letter to a customer who had inquired about the claim, a Tesco spokesperson said: "I can confirm that this is not true", adding that it had "a great business in Scotland" and would "continue to offer the best prices whatever the outcome of the referendum". Tesco said that higher labour and energy costs, along with government levies on certain products such as wine, pushed up some prices in Irish supermarkets.

But the company insisted that "some items of fresh produce, meats and other household items" were actually cheaper in Tesco's stores in Ireland than in its stores in the UK.

The Yes Scotland campaign said that the intervention of Tesco to clarify its position had left the Better together campaign embarrassed. Derek Mackay, the SNP MSP, said: "Tesco's clarification is welcome - the No campaign must withdraw their misleading leaflet as a matter of urgency."