| Year | Global Critical Minerals Price Index (% annual change) | UK Industrial Producer Input Inflation (% annual change) | UK Real GDP Growth (%) |
|---|---|---|---|
| 2022 | +24.8 | 11.2 | 3.8 |
| 2023 | +31.5 | 18.4 | 0.3 |
| 2024 | +14.2 | 12.1 | -0.2 |
| 2025 (Est) | +6.5 | 5.4 | 0.8 |
The UK is highly dependent on foreign suppliers for processed critical minerals (such as lithium-ion cells, neodymium magnets, and cobalt compounds), importing over 85% of its total high-tech industrial manufacturing requirements. When global prices of these key materials rise, these input costs rapidly feed through the domestic industrial supply chain. Advanced UK engineering and automotive manufacturers face significant margin compression unless they pass these costs onto downstream businesses and final consumers. Furthermore, rising critical mineral costs—directly linked to global geopolitical competition and resource scarcity—increase the operating costs of domestic clean energy transition infrastructure, compounding the supply-side shock.
Extract C states: 'Sustained high prices for critical minerals have squeezed industrial investment and escalated capital costs for green infrastructure, forcing some firms to delay key decarbonisation projects. However, not all sectors suffer equally; higher global prices may incentivize structural investments in domestic battery recycling (urban mining), structural substitution of materials, and the rapid development of local high-tech supply chain resilience.'
Use the data in the extracts and your knowledge of economics to assess the likely impact of a sustained rise in global critical mineral prices on the macroeconomic performance of the UK economy.
187 exam-style questions on AQA A Level Economics 2.1 The measurement of macroeconomic performance, covering 2.1.1 The objectives of government economic policy, 2.1.2 Macroeconomic indicators, 2.1.3 Uses of index numbers, and 2.1.4 Uses of national income data (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.