How Scotland's huge soft-power advantages are being wasted
Scotland’s universities produce world-class research, but the economic benefits are nowhere near as great as they could be
Britain enjoys a level of international recognition that many countries would envy. Its universities are respected, its legal and intellectual traditions are well regarded, and its institutions are highly prized in global networks of research, culture, and policy. We are often described as punching above our weight. Yet we remain poor at turning what we know into what we can build.
There are some exceptions that prove the rule. Hubs like Oxbridge’s “Golden Triangle” of cutting-edge research companies don’t happen by accident. They are the product of intentional design and investment, and reflect the coming together of many areas of economic, technological and strategic planning.
They, of course, require the talent, the infrastructure, the amenities, the regulation, the financial system, the market access, and the confidence that these factors will only improve in the future.
But these can be inert without purposeful efforts to finance and settle start-ups, to sponsor research agreements, and to align institutional interests with international partners. Influential hubs do not arise automatically but require planning. This insight sits at the heart of A Greater Britain, my latest book.
Scotland’s bad example
Soft power only matters when it is converted into capability: into firms, supply chains, standards, and economic weight. Scotland offers one of the clearest examples of what happens when that conversion is absent.
Scotland’s universities produce world-class research, yet the outcomes are markedly different. Spin-outs are fewer, scaling is weaker, and successful firms are often acquired or relocated once they reach a certain size. Talent flows outward. Intellectual leadership rarely anchors long-term economic activity at home. Scotland exports capability rather than retaining it.
This matters because Scotland’s soft power is unusually concentrated in knowledge-intensive sectors: education, research, law, climate expertise, and governance.
The reason for failure is the policy environment. High energy costs deter not just manufacturing but the engines of technological research on artificial intelligence, data centres and cloud computing. Regulatory frameworks expand and infrastructure cannot get planning approval.
High taxation and payroll costs make the risks higher while reducing the pay-offs. Together, they have discouraged investment and scaling for the last decade, and the situation is only getting worse.
READ MORE: Call for ‘plan of action’ to boost Scottish productivity ahead of Holyrood election – CBI Scotland
An incoherent approach
Language and law, regulation, foreign aid, finance and foreign investment are areas where Britain tries to lead globally. One of A Greater Britain’s most important observations is that each of these would-be sources of soft power are currently pulling in different directions due to incoherent policy.
A country that cannot build at pace, retain firms, or scale innovation cannot turn these assets into bargaining power. A country that has all but banned oil and gas exploration and infrastructure cannot become an energy bridge to Europe.
A country that drives its wealthy abroad hands over influence over global capital markets along with their tax revenue. A country that has inflicted energy poverty upon itself cannot convince others to follow on climate change abatement and spending much of the foreign aid budget on asylum hotels buys no influence whatsoever.
The Knowledge Power Doctrine developed in the book offers a way forward. It starts from the recognition that Britain’s remaining advantages lie in knowledge-intensive domains, but rejects the idea that knowledge is self-activating. Conversion requires coordination. The doctrine demands that universities, finance, law, regulation, and industrial policy must be aligned so that ideas move into production rather than drifting abroad.
It doesn’t reject the role of the state, but rather highlights that, in a world where the UK only represents 3 per cent of the global economy, being internationally attractive and having smarter regulation is a strict necessity. We have perhaps the strongest corporate law and a broad, global scope of trade access – we have significant advantages whose strengths we refuse to play to.
Lower taxation and cheaper energy
The only path that aligns these goals is that of a lower-tax regime with full capital expensing, cheaper energy and more permissive planning and environmental laws.
Scotland is well placed to benefit from such an approach. It has strong natural energy reserves. Scots law is attractive and secure for large investors. Yet in the last year, Britain has fallen further down international investment tables.
Capital investment and research and development is historically weak, as the government has borrowed billions only to crowd out private investment. Through National Insurance rises and the freezing of tax thresholds, it has become more expensive to do business here, business confidence is low with 64 per cent of all companies in the fourth quarter of 2025 highlighting the tax burden as the reason why.
This approach, unless dramatically reversed, will see Britain lose the opportunity to build and invest in capacity for the new growth sectors of the 21st century. The world will march on as we squander the head-start left to us by the last generation.
The damage to Britain’s foreign policy will be enormous. Britain has been able to play the role it has, and earned the prosperity it has, by placing itself at the very centre of the post-war Atlanticist economic order it sacrificed so much to help build.
If our leaders are not willing to fight for Britain’s role in the next century, then our role will be diminished. We must make a competitive offer to the world, to specialise and play to our strengths, if we are to be prosperous and influential in the coming authoritarian century.
Dr Azeem Ibrahim OBE is the chief strategy officer at the New Lines Institute for Strategy and Policy and author of A Greater Britain: Rethinking UK Grand Strategy and Statecraft
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