BUSINESS leaders in Southampton have reacted with disappointment to news that Swedish furniture giant Ikea will not be setting up in the city centre.

There are fears that, once again, the city may lose out to south coast rivals Portsmouth, who have already wrestled two key yachting events from Southampton.

Last year, city bosses were faced with the news that the Global Challenge ocean race would be hosted by Portsmouth because facilities in Southampton's Ocean Village did not come up to scratch.

Earlier this month, the city was dealt another blow when it was revealed that plans to host the stopover for the Volvo Ocean race in May 2006 had been scuppered with Southampton again losing out to Portsmouth.

Yesterday the Daily Echo revealed how government planning inspectors said the chosen former Pirelli site in West Quay Road was not suitable because it was not close enough to the heart of the city centre.

The ruling means Ikea, who want to build a giant retail store somewhere on the south coast, may site their planned new store in Portsmouth.

The bombshell news has also been branded as absurd by council chiefs who have vowed to continue working with the company to try and find a suitable location.

Ikea have been wanting to build a store in Southampton since 2000. The store would have been a huge draw for thousands of visitors from around the region and a massive boost for the local economy.

Karen Bladen from the Wessex Federation of Small Businesses said: "It is another disappointment for Southampton. Is Ikea now going to go down the south coast?

"Ikea is a big draw. At the end of the day, it would have brought further visitors into the area and more shoppers into the city. It is another blow. Where is it all going to end?"