Prime Minister Gordon Brown has appointed a fellow Scot, Alistair Darling, to succeed him as Chancellor of the Exchequer.
Mr Darling has held a string of cabinet posts
Mr Darling, 53, was Trade and Industry Secretary under Tony Blair and had been heavily tipped for the new role.
However he may face a tough time as the UK economy faces uncertainty.
Interest rates have been raised four times by the Bank of England (BoE) in the past year, and some expect rates to reach 6% by the end of the year.
The BoE has indicated that rates may have to rise to combat the growing inflationary pressures in the economy, and perhaps to curb the boom in house prices.
This follows a period of stable growth, low inflation and low interest rates, which has coincided with Mr Brown being in charge of the economy.
Mr Darling will also preside over a new review of public spending, which promises to be one of the tightest since Labour came to power.
Mr Darling is no stranger to the Treasury, being made chief secretary after Labour came to power in 1997, where he served as Mr Brown's right-hand man.
As a cabinet minister he has also headed the portfolios for social security, work and pensions, transport and Scotland.
BBC Business Editor Robert Peston, who has written a biography on the new prime minister, described Mr Darling, MP for Edinburgh South West as "one of Brown's oldest and most loyal political friends".
The BBC's Economic Editor Evan Davis added that under Tony Blair, the chancellor had, at times, operated in a "semi-independent fashion".
However, he said that under the new regime "you'll know who's in charge, and they'll both be facing in the same direction."