CORNWALL Council officers have recommended approval for an out-of-town shopping centre that could cost Truro £23 million a year.
It is claimed the planned £110 million Coyte Farm retail park near St Austell would also threaten the chance of a major development in the centre of Truro.
The project has been earmarked for approval ahead of a crunch meeting on Thursday that will decide its fate.
Cornwall Council officers claimed the development's benefits outweigh the impact it would have on St Austell town centre, in a report published on Tuesday.
If approved, the Coyte Farm plan – submitted by Metric Property and Mercian Developments – would include a major retail park featuringMarks & Spencer, Next and Sainsbury's stores at St Mewan.
The report produced by Cornwall Council planning officers said: "The application would stimulate economic growth, via a fully funded scheme with a construction value of £50m, which in turn would create employment opportunity to the benefit of the local economy."
But concerns have been raised regarding the impact of the proposed scheme on the economy in Truro.
The report states: "It may well result with the loss of employment opportunity elsewhere by the retail component, drawing trade to the detriment of existing shops but a significant net gain in employment is expected."
Cornwall Council commissioned a report from consultants GVA Grimley in January 2013, which said: "We predict that trade diversion from Truro will be in the order of £23 million, which will lead to a 4 per cent reduction in the turnover of stores in Truro."
The report also stated there was "potential for retailers to occupy premises at Coyte Farm rather than occupy premises in St Austell and Truro".
Further studies carried out by the applicant and Cornwall Council predicted less of an impact.
St Austell trader Ally Watkins, who set up the Stop Coyte Farm campaign, said: "Coyte Farm is just far too big.
"If it is approved it is not just St Austell that will suffer, so will all the towns within a 25-mile radius."
The plans will go before the council's strategic planning committee on Thursday.