Scotland's £4.7 billion problem no one wants to talk about

Scotland has a £4.7 billion problem that politicians don't want to talk about, certainly not at this election.

It's a number that should be at the centre of the election campaign but can't be found in any of the parties' manifestos.

And yet it will likely define every decision made by the next Scottish Government, starting on day one.

By the Scottish Government's own admission, Scotland is heading towards a funding shortfall of £4.7 billion by 2029.

Meaning the money the government spends will drastically outstrip the cash available to it.

That's the trajectory Scotland is on right now and every voter should be asking the simple question: does any party have a credible plan to deal with it?

These stats from the Scottish Government's Medium Term Financial Strategy, and confirmed by the Scottish Fiscal Commission in 2025, are not new.

But what has changed is the world around it. Geopolitical instability and the ongoing conflict in the Middle East have added new layers of risk to public finances.

For Scottish businesses, this means higher operating costs and weaker demand; for the Scottish Government, it means an already tight fiscal position being squeezed even further.

Compared with Westminster, Holyrood has far stricter borrowing limits. So the next government will have no choice but to close this gap through some combination of spending cuts, tax rises, or economic growth.

Two of those options make Scotland worse off, only one makes it stronger.

While every party has made spending promises this election, few have explained how they will pay for them.

Scotland has cycled through economic strategies for two decades: Government Economic Strategy, Scotland's Economic Strategy, the National Strategy for Economic Transformation — each has come with new plans, new slogans but they have struggled to move the dial.

The fiscal position Scotland now faces demands something different: not a new slogan, but policies with clearly specified objectives, the capacity to deliver them, and a government with economic growth at its core.

Economic growth is not an abstract concept. When the economy grows, wages rise, public services are better funded, and communities are more secure.

When it stalls, the consequences are immediate and they fall hardest on the people who can least afford them. Unemployment rises, investment dries up and the services people rely on face cuts.

The next Scottish Parliament will have no choice but to face this fiscal reality head on and the next Government should prioritise a credible plan, working with business to make sure our economy can fire on all cylinders.

This means unlocking private investment through meaningful reform of the planning system and the Scottish and UK Governments working together to unblock the pipeline of major projects that Scotland needs.

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It means a stable, competitive tax environment. It means a skills system that actually delivers and matches employer demand. It means putting economic growth at the centre of everything because the only way to fill a £4.7 billion gap is to grow the economy, not squeeze it further.

It also means a cabinet shaped for the modern economy, with Ministers who champion business, who understand and support innovation and AI, and who work with companies of every size and sector to ensure policies, regulations and frameworks are fit for purpose, workable and grounded in how businesses actually operate.

Scotland has many strengths: from world-class universities and a well-educated workforce to globally recognised food, drink and culture, genuine leadership in offshore and onshore energy assets, and life sciences at the frontier of discovery.

The pieces of the puzzle are there, what Scotland needs now is a government with the ambition to put them together.

Business is ready to be a genuine partner in that, but partnership starts with honesty. Scotland deserves a grown-up conversation about what the next five years will actually require.

The clock is ticking, the number is £4.7 billion, and it is time that politicians from all parties were honest about the economic realities we face.

Michelle Ferguson OBE is Scotland Director at the Confederation of British Industry