Persuading graduates from Birmingham universities to find employment locally has been identified as a key challenge in the battle to boost the city's economy.

Council and business leaders are determined to plug the brain-drain - the annual exodus of university leavers to well-paid jobs in London and the South-east.

Research by Professor Michael Parkinson, carried out for the Office of the Deputy Prime Minister, shows that Birmingham was outstripped in terms of increased wealth generation between 1995 and 2002 by Manchester, Leeds, Newcastle, Liverpool, London and Sheffield.

Birmingham's percentage improvement in gross value-added per capita during the period was slightly below the national average, at 40 per cent. Manchester recorded almost 60 per cent, while Leeds and Newcastle hit 50 per cent.

In the EU league for economic performance, Birmingham lags behind competitor cities including Frankfurt, Munich, Stuttgart, Copenhagen and Amsterdam.

Prof Parkinson identified the key to economic success for cities - to have a university and an airport.

He also noted that towns and cities with a high proportion of graduates in their workforce performed better economically.

Connectivity - good transport links - was a "vital" component for economic success, the report added.

Difficulties in convincing graduates to find work in Birmingham were highlighted at the Summit for the Future, organised by the city council on Tuesday.

Council leader Mike Whitby said both public and private sectors would address the problem.

Coun Whitby (Con Harborne) added: "We have to have affordable housing for graduates and a career path that is exciting and rewarding for them."

He also highlighted Prof Parkinson's comments about connectivity, which demonstrated the need for expansion of Birmingham International Airport and redevelopment of New Street Station.

Coun Whitby insisted there were already signs that the Birmingham economy was growing at a fast pace.

Coun Whitby added: "Today over a quarter of the UK's exports originate in the Birmingham city region. Over 100,000 people are employed in the professional sector, the largest outside of London.

"We are at the cutting edge of excellent design. We have moved from an industrial centre to a services-based economy."