A row between Israel and the US has erupted after Secretary of State John Kerry cautioned Israel about a potential global boycott if peace talks fail.

Mr Kerry warned Israel about the growing sanctions against the country at a Munich security conference on Saturday.

He urged Israel to move the peace deal forward and said any calm Israel currently enjoys was “illusionary”.

Israeli Prime Minister Benjamin Netanyahu hit back, saying Mr Kerry was encouraging the global boycott.

He told his cabinet this Sunday that Mr Kerry’s statement would encourage the Palestinians “to adhere to their intransigent positions and thus push peace further away.”

He said: “Attempts to impose a boycott on the state of Israel are immoral and unjust.”

Israel’s Economy Minister Naftali Bennett joined Mr Netanyahu in the attack on Mr Kerry, saying the US Secretary of State should be supporting Israel rather than encouraging boycotts.

“Let us make it clear to all those giving advice a nation has not been born including us that will give up its land because of economic threats,” he said.

PGGM, the second-largest pension fund in Holland, recently said it would divest its holdings in Israeli banks, citing concerns over their work in the settlements.

The largest Dutch pension fund, ABP, is also considering similar steps and has asked Israeli banks for clarifications over their operations in the West Bank.