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In 1603, the Scottish King James VI inherited the throne of England, and became James I of England. James moved to London and only returned to Scotland once. In 1707, the Scottish and English Parliaments signed the Treaty of Union, which was deeply unpopular in Scotland, as it had been negotiating from a position of economic weakness and suffering from English tariffs. Implementing the treaty involved dissolving both the English and the Scottish Parliaments, and transferring all their powers to a new Parliament sitting in London which then became the Parliament of the United Kingdom. A customs and monetary union also took place.

The modern system of branch banking (in which banks maintain a nationwide system of offices rather than one or two central offices) originated in Scotland. Only strong political pressure during the 19th century prevented the resultant strong banking system from taking over banking in England. However, although Scottish banks proved unwelcome in England at the time, their business model became widely copied, firstly in England and later in the rest of the world.

Tied as it was to the health of the British Empire, Scotland suffered after the First World War as it had gained beforehand. In the Highlands, which, for cultural reasons, had provided a disproportionate number of recruits for the British army, a whole generation of young men were lost, and many villages and communities suffered greatly. In the Lowlands, particularly Glasgow, the terrible working and living conditions for the industrial workers, many of whom did not agree with the motives of the war, led to industrial and political unrest. John MacLean became a key political figure in Red Clydeside and on Bloody Friday January 31st 1919, the British Government was so fearful of a revolutionary uprising in Glasgow that tanks and soldiers were stationed in George Square.

Banking in Scotland also features unique characteristics. Although the Bank of England remains the central bank for the UK Government, three Scottish corporate banks still issue their own banknotes: (the Bank of Scotland, the Royal Bank of Scotland and the Clydesdale Bank). These notes have no status as legal tender in England, Wales or Northern Ireland (although they can be used throughout the UK, particularly in Northern Ireland, where Irish banks also issue their own banknotes, and they are also freely accepted in the Channel Islands). In Scotland, neither they nor the Bank of England's notes rank as legal tender (as Scots law lacks the concept), however banknotes issued by any of the four banks meet with common acceptance

In 1512 under a treaty extending the Auld Alliance, all nationals of Scotland and France also became nationals of each other's countries, a status not repealed in France until 1903 and which may never have been repealed in Scotland. However a year later, the Auld Alliance had more disastrous effects when James IV was required to launch an invasion of England to support the French when they were attacked by the English under Henry VIII. The invasion was stopped decisively at the battle of Flodden Field during which the King, many of his nobles, and over 10,000 troops — The Flowers of the Forest — were killed. The extent of the disaster impacted throughout Scotland because of the large numbers killed, and once again Scotland's government lay in the hands of regents.

Scotland ( Alba in Scottish Gaelic and sometimes known also as Caledonia) is a country or nation and former independent kingdom of northwest Europe, and one of the four constituent parts of the United Kingdom. Scotland has a land boundary with England on the island of Great Britain and is otherwise bounded by seas and oceans.

At one stage, Scottish peers were entitled to elect sixteen representative peers to the House of Lords. In 1963, the Peerage Act was passed, allowing every Scottish peer to sit in the House of Lords. However, since the current Labour government's reforms of that house this is no longer the case and hereditary Scottish peers have to stand for election from amongst all eligible peers to sit in the house as part of a group of 92 entitled to do so.