‘What double-dip recession?’ quipped a guest at the post-show banquet, held in a purpose-built ‘glass’ marquee in the grounds of Linlithgow Palace outside Edinburgh, where fire baskets raged, snow flurried, bagpipes played and a (discreet) mist machine all helped to convey quite possibly the most atmospheric fashion show ever staged.

In the palace courtyard, 350 guests huddled on specially erected wooden benches, Chanel-issued blankets slung across their knees, sipping from flutes of champagne or tumblers of whiskey, to witness ‘Paris-Edimbourg’ – Chanel’s latest Metiers d’Art collection, essentially a pre-fall collection that is shown once a year in a different location and celebrates the craftsmanship of the small ateliers owned by Chanel.

‘There are so many connections,’ said a spritely Lagerfeld on the subject of Scotland for this show, which opened with Scottish-born House favourite swaddled in tartan checks and Fair Isle knitwear.

He proceeded to rattle off Gabriel Chanel’s passion for Scotland where she spent much of her time in the 1920s striding around on the estates owned by her lover the Duke of Westminster, borrowing his clothes and being inspired to design one of her most iconic creations – the tweed suit. Recreated in this collection by Lagerfeld in bold tartans and worn with great white pussy-bows at the neck, diamond-patterned tights, flat sturdy boots and sporren bags or whiskey flasks swinging from the hips. It was Coco on the moors reincarnate – only for 2013, she’s wearing bejewelled Fair Isle tank tops with her Plus Fours and listening to music inspired by Japanese video games, or ‘Scottish Manga’, as Chanel’s ‘sound stylist’, Michel Gaubert put it.

But Lagerfeld’s passions seemed even more ignited by the history of Linlithgow itself – birthplace of Mary Queen of Scots who became Queen Consort of France and eventually lost her head to Elizabeth I when she was decapitated for treason. This is what really fired Lagerfeld’s visionary furnace. Young ‘Elizabeths’, their red hair punkishly corn-rowed by Sam McKnight, looked fiercely beautiful in pheasant-feather neck ruffs and grand gothic tartan coats or the last series of regal long snow white gowns, some with feathered edges, all stitched with the lightest, finest hand.

If all this sounds theatrical, it was, but in this medieval setting, in front of this audience – which, after a false Twitter storm, did not include Angelina Jolie and Brad Pitt, but actresses Anna Mouglalis, Zhou Xun, Amira Casar and Joana Preiss together with Chanel ambassadresses (or Les Fideles as calls them) Poppy Delevingne, Caroline Sieber and Caroline de Maigret - these were clothes that made you dream’.

There is no context for a show like this. Few fashion houses on the ready-to-wear circuit, with the exception of , can compete with Chanel – its wind turbines, giant stalactites or magical underwater worlds – so when Lagerfeld raises the bar like this, transplants Chanel on a beautiful Scottish ruin on a snowy winter’s night in December, he not only surpasses even himself, he leaves the rest of fashion for dust.

Asked if this was his first time in Scotland, Lagerfeld surprisingly conceded, ‘I must admit, yes.’ The designer has never been one for sightseeing, preferring instead to imagine the land that inspires him from his great library. ‘I am not a tourist, no,’ he pronounced, ‘But I know everything about Scotland, everything from books.’

See the Chanel Metier D'Arts show in pictures