It will support investment in communities with councils, health boards and other public bodies focusing on the generation, circulation and retention of wealth in local and regional economies.

This could include buying or procuring more goods and services from local businesses, boosting social enterprises or helping community groups to acquire vacant buildings and land.

Public finance minister Ivan McKee said: “Community Wealth Building is an approach to economic development that can deliver sustainable growth and foster resilience in our local economies.

“This unique legislation will help to deliver more benefit from investment in local economies so that they become fairer, greener and more prosperous.

“It will also strengthen partnership working in our communities, and I look forward to working closely with public bodies to building on existing links.”

Neil McInroy, chair of the Economic Development Association Scotland, added: “We support the Bill because it marks a positive shift in economic development amid wider global crises and upheaval. Some local councils and many organisations across Scotland are already advancing Community Wealth Building, and this Bill provides the enabling framework that secures that progress and deepens it.

“By changing patterns of wealth, it boosts productivity, helps tackle child poverty and cost‑of‑living pressures, and builds economic dynamism. Crucially, it advances economic democracy by giving communities, workers, and all of us a fuller stake in Scotland’s future.”

Stacey Dingwall, head of policy & external affairs (Scotland) at the Federation of Small Business (FSB), said: “FSB is a long-time supporter of the Community Wealth Building agenda, therefore it’s welcome to see the Bill pass today.

“Opening up public procurement contracts to small businesses is crucial to boosting economic growth, yet many still face barriers to accessing opportunities. Passing this legislation gives us a real chance to make progress here. Investing more public money in local businesses is also an investment in local job opportunities, ensuring as much wealth as possible is retained in local communities.”