Sir George Mathewson said tackling Scotland's growth would not be easy

He told Holyrood the 11-person council would be the centrepiece of the Scottish Executive's blueprint to improve competitiveness.

The CEA's membership includes two Nobel laureates in economics.

It will be chaired by the former Royal Bank of Scotland chief executive and chairman Sir George Mathewson.

Also included is former Scottish Enterprise boss Crawford Beveridge who, along with Sir George, backed the SNP in the election campaign.

BUSINESS LEADERS ON THE CEA Jim McColl, Clyde Blowers chairman Sir Robert Smith, Weir Group chairman Crawford Beveridge, Sun Europe chairman

The economic council will be charged with coming up with ideas which will enable Scotland's growth levels to match those of the UK within four years.

The council will meet quarterly and advise the first minister directly on ways to improve the country's growth rate.

Mr Salmond told the Scottish Parliament that the council was the "most formidable, intellectual firepower ever to have tackled Scottish economic underperformance".

He said: "Its formation sends out the clearest message both domestically and internationally that Scotland is serious about tackling economic underperformance.

"The council stands as our best chance in several generations to tackle the problem of systemic economic mediocrity."

'Governments govern'

The two Nobel laureates are Professor Finn Kydland, the Henley Professor of economics at the University of California, and Professor Sir James Mirrlees of Cambridge University.

Mr Salmond said Scotland had an annual growth rate of 1.8% per year, compared to a UK rate of 2.3% and 3% in small European countries.

The first minister insisted that his administration would retain responsibility for decision-making.

"Advisors advise, governments govern," he said.

ECONOMISTS ON THE CEA Frances Cairncross, Oxford University Prof Andrew Hughes Hallet, George Mason University, USA Prof Alex Kemp, Aberdeen University Prof John Kay, Institute for Fiscal Studies Prof Finn Kydland, University of California Prof Frances Ruane, Trinity College Dublin Sir James Mirrlees, Cambridge University

The first minister also insisted the group would be politically impartial.

Sir George said: "Raising the economic growth rate will not be easy, but it is necessary.

"We should be confident that Scotland's talented workforce, dynamic modern industries and a track record of ingenuity provide the foundations we need to be more economically successful.

"Now it's time to think about what else we can do to position ourselves to be even more competitive in the global marketplace."

As well as serving as chief executive and then chairman of the Royal Bank of Scotland, Sir George also spent six years as the chief executive of the Scottish Development Agency.

Labour leader Jack McConnell agreed there was a need to address Scotland's economic performance.

Inward migration

However, he said Scotland's performance had been improving in research and development and inward investment, with migration and employment levels also increasing.

He said: "Population decline has been reversed and we have had in recent years the highest inward migration in decades."

He claimed that much of that success had been through the engagement of the international advisory board of Scottish Enterprise.