Background: Teacher education in Scotland has developed its own trajectory for many years and this distinctiveness appears to have increased since the creation of the Scottish Parliament in 1999. Teachers' pay and conditions were addressed in 2001 by the agreement "A teaching profession for the 21st century." This agreement led to a number of innovations in teacher education and development. More recently, there has been a report of the Review of Teacher Education in Scotland by Graham Donaldson and a committee is currently reviewing teachers' pay and conditions. Purpose: This article examines the extent to which the development of teacher education in Scotland has been affected by the global financial crisis and its impact on the provision of public services. Three policy contexts are explored in turn, those of politics and economics, education and teacher education, so that the analysis moves from the wider societal perspective towards the specifics of teacher education. Sources of evidence: The article draws on a close analysis of relevant policy documents, including those produced by the Organisation for Economic Cooperation and Development, the Scottish Government and the General Teaching Council for Scotland. Additionally reference is made where appropriate to a wide range of published research and to reports such as the Review of Teacher Education in Scotland. Main argument: The ways in which teacher education policy in Scotland is developing is a result of the interaction between history, culture and politics played out at a national level under the wider influence of UK, European and global affairs, both economic and political. There are real tensions in the current conjunction of policies and trends, which create major challenges for all those involved. The promotion of career-long professional learning and enhanced school autonomy proceed alongside the review of teachers' professional conditions (McCormac Review), high levels of intermittent employment among new teachers, fluctuations in student numbers and staffing in university Schools of Education, and contracting resource to support school-level curriculum development and continuing professional development. The social partnership achieved between employers and practitioners is under increasing strain; and relations of partnership between universities and schools are subject to increasing critical scrutiny. Teaching in a time of crisis creates new challenges, and the need for innovative approaches to enduring challenges, in the short and longer term. Conclusions: The longstanding commitment to explicit values in Scottish culture and education is all the more important in a context where pressures for accountability and efficiency are greater than ever. (Contains 2 notes.)