Business leaders in Jersey have warned that building a new supermarket would not lead to lower grocery prices on the island.

Developer Le Masurier has applied to build a £25m retail complex in St Helier and is in talks with an unnamed UK multiple and a French operator about leasing part of the site as a supermarket with 40,000 sq ft of selling space.

CI Traders, which already operates supermarkets on the island, is poised to apply for permission to build another - understood to be a UK store - on the site of a brewery nearby.

The island's Council of Ministers has agreed a policy to allow future retail development in light of a study by Experian indicating that stores on the island were over-trading compared with their UK counterparts.

There are just a handful of small and medium-sized supermarkets on Jersey - and no Tesco, Asda or Sainsbury's. Morrisons inherited a store from the Safeway deal, but sold it to CI Traders. But Jersey's Chamber of Commerce opposes further retail development. "We are still not convinced that the benefit of more supermarkets will outweigh the costs," said president Kevin Keen.

"It is not just about cheap food. Jersey is an expensive place to do business, so anybody who tells you that more competition will give us the same prices as the UK mainland is mistaken."