How Scotland can develop an economic strategy which actually delivers

When we view Scotland within the UK, Scotland has the third highest output per capita (compared with other regions), while Scottish Enterprise report that overall comparative performance over the last 10 years has been “relatively constant” across a wider set of indicators. Across Scotland, different places continue to evidence starkly varied fortunes, illustrating the differences in economic opportunity that the economy has offered.

Adding to these existing economic disparities are a series of longer-term trends including demographic pressures from an ageing population and rising health and mental health issues among the population. Layered over this landscape are the implications of national policy agendas, including the drive toward the energy transition with its pronounced implications for the economy of the North East of Scotland.

The guiding light for the Scottish Government in its economic policy since 2022 is the National Strategy for Economic Transformation (NSET) - critiqued by many and adopted by few, it seems. Perhaps the core challenge inherent in NSET is its very broad view of economic change sought. Re-reading NSET, it is striking that it touches on such a swathe of policy areas in the service of a broadly stated notion of delivering a ‘wellbeing economy’. Everything is important it seems.

Given that NSET committed to a “culture of delivery”, one “built on a willingness to challenge and to adapt any aspect of this strategy that does not deliver”, it is reasonable to ask what any adaptation might look like. However, with a Holyrood election just weeks away, considering what a fuller strategic overhaul may involve is also of value.

Anticipating who will be in charge after May is best left to others, but it is not hard to see the stark economic and fiscal context they will face, and which will demand an early and credible response. While economic strategies over the past decade have taken various stances in terms of seeking significant and sustained economic growth as a core objective, the growth question looms large now. So, what should a revised economic direction for Scotland look like? In setting that direction, four core dimensions should, in our view, guide a renewed approach to Scotland’s economic development.

First, it needs to be built on clearly specified objectives. The last 10 years have seen a roster of economic development initiatives launched, underscored by a shifting set of progressive economic agendas – from inclusive growth to community wealth building and a vaguely articulated wellbeing economy. Deciding, through rigorous prioritisation, what an economic development strategy can deliver, and what it cannot deliver (but interacts with), seems a sensible starting point. We need to move beyond slogans that work well in a press release but rarely make it further.

Second, and with some sense of prioritisation given, we need to consider the capabilities and resources to deliver on the chosen objectives. It is easy for policymakers to write down what they want the world to be like, but an honest appraisal of what can be done through existing capacities and constraints is vital. This should start with an assessment of what outcomes NSET has achieved to date. Is there any evidence of a “transformation” or emerging signs of it? What hasn’t happened might also help guide an understanding of future difficulties.

Third, a revived direction for Scotland’s economy needs to reflect the wide range of organisations involved in economic development policy. Economic development in Scotland is not solely in the gift of the Scottish Government and draws in local government, regional economic partnerships, and arm’s length agencies. More specifically, co-working has to include developing a more functional relationship with the UK Government too. The UK Government takes active and direct investment roles in the Scottish economy through city-region and regional growth deals, innovation accelerators, investment zones and Green Freeports. A strategy for Scotland’s economy from the Scottish Government that ignores or skirts around these mechanisms will miss opportunities for developing complementary initiatives; such a shared and co-operative commitment falls on the UK Government as well. Governance effectiveness matters. Fourth, there is an opportunity to foreground regionalism within a refreshed economic strategy. This should build upon the work and capacity that has emerged through the city-region and regional growth deals agreed over the last decade.

There’s some momentum for this, with the First Minister offering some support for a regionalist drive in late 2025. Our colleague Anton Muscatelli also elaborated on what regionalism within Scotland might look like in a report for Scottish Labour. What this entails in practice needs to be worked through, but there must be a strong emphasis on regional empowerment within Scotland.

We should be open to considering greater regional decentralisation within Scotland, whether this means giving powers to localities and/or mandating that national agencies are responsive to local demands. A more mature political debate is required here, sustained by an understanding that local areas are encouraged to develop their own ideas, underpinned by accountability and reporting processes that are appropriate and proportionate.

In writing a new economic strategy for Scotland, the next government – of whatever political colour – will do so facing a global economy in radical flux, with geopolitical “rupture” looking set to become the new normal, as the Canadian Prime Minister Mark Carney remarked recently. The new strategy needs to begin by acknowledging its own limitations in such a world, and to focus its attention on where it can deliver meaningful change for the people of Scotland. Economic development is not delivered by a single institution, and success will depend on building a realistic, shared vision with partners across different parts of the country, and with the UK Government. It also depends on trusting and empowering these partners to deliver that vision.

David Waite, Senior Lecturer in the School of Social and Political Sciences, University of Glasgow

Stuart McIntyre, Professor of Economics at the University of Strathclyde