Today, 129 elected representatives filled the chamber of the Scottish Parliament to take their oaths of office. On the surface, the new political landscape feels somewhat familiar – the SNP has secured a historic fifth consecutive victory, and John Swinney is set to return as First Minister. 

 

But beneath the veneer of continuity, Holyrood is undergoing one of the biggest transformations in its history. A full third of MSPs from the last parliament chose not to seek re-election, and half of those taking their seats today are new to the chamber. This isn't just a new session, it is a changing of the guard. 

 

This influx of new MSPs must bring more than just some new faces. It presents an opportunity for fresh thinking, new ideas, and a renewed sense of purpose. Because the defining mood of this election was not enthusiasm, but frustration. In the weeks leading up to polling day, survey after survey detected what many described as the “scunner factor”: a feeling that voters were uninspired by the choices on offer and unconvinced that any party had a compelling vision for the country’s future. Voter turnout fell to 53%, down from a historic high of 63.5% in 2021, in what some pollsters have described as a “meh election”. 

 

So what were the concerns voters felt were going unanswered? Polling consistently shows voters prioritising one issue above all others: the cost of living, and the state of the economy more broadly. Given the economic reality facing ordinary Scots, it is not difficult to understand why.  

As highlighted in our recent Election Spotlight series, today the average worker in Scotland earns little more than they did back in 2008, nearly two decades ago. Households have been squeezed by a pincer movement of weak wage growth and rising prices, with the cost of key household essentials soaring by more than 50% over the last parliament. 

Meanwhile, public services have continued to deteriorate after years of austerity, squeezed budgets, and rising demand. An entire generation has grown up in a country where stagnant wages, rising costs, and struggling public services are seen not as a crisis – but as the norm. Scotland has forgotten what progress looks like, and this has inevitably bred frustration, distrust, and disillusionment. 

 

The key question, then, is: how can Scotland turn its economic fortunes around? What can the next government do to raise living standards, improve public services, and deliver a renewed sense of hope?

 

There are no easy answers, but one thing is clear: business-as-usual is not going to cut it. The last parliament delivered the weakest earnings growth since devolution, with the exception of the immediate aftermath of the 2008 financial crisis. Part of this reflects a succession of global shocks – from the Covid-19 pandemic to the wars in Ukraine and the Middle East – which sent energy and food prices soaring across the world. The UK, heavily reliant on imported energy and deeply exposed to fluctuations in global markets, has been particularly vulnerable to these pressures compared with many of its European neighbours. 

 

But not everything can be blamed on external events. The causes of Scotland’s economic malaise are longstanding and deep-rooted. While Scotland retains many economic strengths, several of the industries that powered growth in previous decades – including North Sea oil and gas, financial services, and whisky – are now either mature, slowing, or entering long-term decline. Moreover, most of Scotland’s largest industries are owned overseas, meaning billions of pounds of profits flow out of Scotland every year rather than being reinvested domestically. Compared to other small European countries, the number of globally competitive, Scottish owned-firms is vanishingly small. 

 

There are also deeper structural problems at play. Investment is the lifeblood of any successful economy: without sustained investment in infrastructure, industry, skills, and innovation, long-term prosperity becomes impossible. Yet for years, Scotland – like the wider UK – has languished near the bottom of the league tables for investment among advanced nations. The consequences are predictable: weak productivity, stagnant wages, and declining living standards. Unless this cycle of underinvestment is broken, Scotland’s economic malaise is unlikely to improve.

 

As such, the path to sustainable prosperity lies in an investment-led renewal that builds on Scotland’s core strengths: abundant natural resources, a highly skilled workforce, world-class universities, and a long tradition of innovation and enterprise. Where do such opportunities lie?

 

For some parties in this election, the answer was straightforward: double down on fossil fuel extraction. Even if this weren’t incompatible with Scotland’s climate commitments, it does not offer a viable long-term strategy. The North Sea is a maturing basin, and Scotland’s fossil fuel reserves are running out. While critics of climate policy sometimes blame net zero targets for the industry’s decline, the reality is more fundamental: geology and economics are driving this shift. While the North Sea will continue to play a vital role for many years, Scotland’s future prosperity will not be powered by industries whose best days are behind them. The unavoidable truth is that Scotland must now prepare for a post-fossil fuel economy. 

 

This transition away from carbon-intensive industries undoubtedly poses profound challenges. But it also presents one of the greatest economic opportunities Scotland has seen in generations. In an increasingly unstable and volatile world, the global shift towards clean energy is accelerating rapidly. The question is no longer whether this will happen, but who will benefit from it. With vast renewable resources, deep energy expertise, and a highly skilled workforce, Scotland is exceptionally well placed to prosper from this transformation. Our research has shown that, with the right ambition and policy, Scotland has the potential to create up to 40,000 more green energy jobs than will be lost from fossil fuels by the end of the decade. 

 

But capitalising on this opportunity will require far more than simply building more wind farms. It requires a deliberate strategy to grow domestic supply chains, strengthen manufacturing capacity, and maximise the number of high-quality jobs created here in Scotland. It also requires a more determined effort to ensure the benefits of Scotland’s energy wealth are shared broadly across society. On current trajectories, there is a real danger that the gains from the energy transition will flow disproportionately to distant investors and large asset managers, rather than the communities powering it.

 

But the opportunities extend far beyond wind turbines and solar panels. Decarbonising heat, transport, industry, and buildings will require vast investment over the coming decades, which in turn could support thousands of skilled jobs across Scotland. Restoring nature will also demand major investment in peatland restoration and woodland creation, creating rural jobs while strengthening Scotland’s resilience to climate change. There is also an opportunity to secure a foothold in the green supply chains of the future by matching Scotland’s world-leading research base with industrial renewal. Closer collaboration between business, government, and universities can drive innovation and help commercialise the technologies that will shape the global economy of the twenty-first century. 

 

If Scotland is to capture the full economic rewards of decarbonisation, we must do more than simply consume green technologies – we must design, build and export them. Just as Scotland once helped power the fossil fuel age, we now have the potential to become a global leader in the industries that will define the post-carbon economy – from renewable energy and advanced manufacturing to green finance and professional services. 

 

But none of this will happen automatically. It requires an active state willing to invest in the transition, shape the labour market, and support the growth of new industries. Too often however, the Scottish Government has opted for a reactive approach – stepping in only after struggling firms fail, rather than proactively nurturing the industries and supply chains of the future. As countries across the world adopt increasingly assertive industrial strategies to grow domestic green industries, there is a real danger that Scotland falls behind. As we wrote in our recent report with Professor Mariana Mazzucato: “small economies like Scotland face a stark choice: either act boldly to shape markets, or be shaped by global market forces.”

 

If Scotland is serious about delivering economic renewal, a far more ambitious shift in economic policymaking is now required – one that rethinks the role of the state not simply as a market fixer, but as an active market shaper. This means recognising that Scotland’s economic, social, and environmental goals are not competing priorities, but deeply interconnected challenges. Whether it is Scotland’s squeezed living standards, strained public services, or persistent poverty, all stem from the same underlying problem: an economic model that isn’t working.

 

The task ahead is not simply to decarbonise the economy, but to fundamentally reshape it. Rather than pursuing conventional growth strategies and attempting to manage the social and environmental fallout afterwards, the goal must be to build an economy that is fairer, more resilient, and more sustainable by design. At a national level, this means embracing a mission-oriented industrial strategy that uses the full range of policy tools, public institutions, and state capabilities to drive long-term structural change. This must be coupled with credible plans to decarbonise key sectors, invest in skills and workforce transition, and create a stronger social safety net.

 

At a local level, it means supporting Community Wealth Building strategies that enable communities to create and retain more wealth locally, capitalising on Scotland’s pioneering new legislation. Across the country, workers and communities must be empowered to participate in – and benefit from – Scotland’s path towards decarbonisation. Delivering all of this, in turn, will require strong public finances and an active, capable, and well-resourced state.

 

The goal is not simply to meet climate targets for their own sake. It is about using the transition to net zero as a catalyst to build a fairer, more resilient, and more prosperous economy. This is why at Future Economy Scotland, we are focused on the concept of delivering a just transition. It is not simply a climate imperative – it is Scotland’s greatest economic opportunity. The prize? More well-paid, secure jobs across urban and rural Scotland. Higher productivity and wages. Cheaper and more reliable energy. Stronger public services. Lower poverty and inequality. And of course, a cleaner and healthier environment. 

The key question now is whether Scotland’s political parties are prepared to rise to the scale of the challenge. Ahead of the election, we assessed all party manifestos against the requirements of a just transition. Among the MSPs being sworn in today, more than three quarters stood on platforms that committed to delivering net zero by 2045. There is therefore a clear opportunity to build consensus around an ambitious agenda for economic renewal – one that aligns climate action with rising living standards, stronger public services, and reduced inequality. But achieving this will require a more mature style of politics: one rooted in long-term, cross-party collaboration rather than short-term partisan point-scoring.

 

While the long-term benefits of this transformation will far outweigh the costs, delivering it will require sustained public investment alongside a commitment to ensuring that costs are shared fairly. Yet our analysis found that no party entered this election with a fully credible plan for funding the transition while maintaining long-term fiscal sustainability. As outlined in our recent paper, ‘Funding Scotland’s Future’, there are significant opportunities to build a tax system that is not only fairer, but also more efficient – raising revenue while reducing inequality and supporting long-term growth. With Scotland facing a projected £2.6 billion budget gap for day-to-day spending, meaningful tax reform will need to become a central priority for the new parliament if it is to avoid damaging and self-defeating cuts to public spending.

 

And last but not least, there is a clear need for stronger collaboration between the Scottish and UK Governments. Many of the levers required to deliver a just transition – particularly in energy, industrial policy and the labour market – sit at the UK level. Seizing these opportunities will therefore require collaborative, joined up working – not just in Holyrood, but also with counterparts in Westminster. At a time of such profound challenges, effective cooperation between governments is no longer optional, it is essential.

 

As this new parliament begins, Scotland stands at a crossroads. One path leads to more of the same: stagnant living standards, deteriorating public services, and deepening public frustration. The other points towards economic renewal – powered by investment in a just transition that creates a virtuous cycle of higher living standards, stronger public services, lower inequality, and a cleaner, more secure future.

 

The question is not whether Scotland has the resources, skills, and potential to succeed, but whether its political leaders are prepared to match that potential with the scale of ambition this moment demands. If this new parliament is willing to rise to that challenge, then a fairer, greener, and more prosperous country is within reach. But this can’t be achieved by making minor tweaks to the status quo, or by attaching sticking plasters to a broken model. Instead, Scotland must be willing to embrace bold, forward-looking ideas to transform the economy. 

 

Future Economy Scotland looks forward to working with MSPs across the parliament who want to turn that vision into reality.