Yilmazlar Construction Group’s chief executive, Ahmet Reyiz Yilmaz, told Bloomberg that $2.6m of his assets had been frozen by Israel because of increased tensions between the countries, following the death of nine Turkish pro-Palestinian activists on the Gaza flotilla.

Mr Yilmaz said it was a “dangerous precedent” and blamed the Turkish Prime Minister for ruining his business by his anti-Israel rhetoric.

He said: “The reason was only the politics of our prime minister. He has a responsibility to his country, and he cannot say irresponsible things.”

Yilmazlar has operated in Israel for 16 years, including building the Ministry of Defence and parts of Ben Gurion airport.

Mr Yilmaz said he was confident of winning his lawsuit against Mr Erdogan and his government after the Israeli judge who froze his assets cited the Prime Minister’s speech as the reason for the freeze.

Turkey has withdrawn its ambassador to Israel, and Mr Erdogan has called the Israeli government “tyrants, bandits, pirates – even they have their own rules of ethics.” He said: “Israel has trampled on the rules of humanity.”

Broken relations between the two countries will hit hundreds of business hard, and trade from Turkey to Israel is worth $1.5bn. It will also affect the tourist trade, with hundreds of thousands of Israelis holidaying in Turkey.