The unexpectedly robust UK economy opens the door for more BoE rate increases.

Britain's economy eked out surprising growth in the second quarter, setting the stage for more interest rate increases from the Bank of England, but it still hasn't recovered to its pre-COVID, late-2019 level, making it the only significant advanced country to haven't done so.

In contrast to the average forecast in a Reuters survey of experts for a flat reading, official statistics released on Friday showed the economy expanded by 0.2% in the second quarter. The data caused the pound to appreciate significantly versus the dollar and the euro.

The result was aided by the fact that June's monthly rise of 0.5% exceeded all expectations in the Reuters poll, which had predicted a 0.2% increase.

Given that the BoE underlined this month that the durability of the economy was one of the variables that would underlie its judgement, the robust performance increased wagers that the central bank would maintain rising interest rates.

For the second quarter, the central bank itself had projected growth of 0.1%.

As investors absorbed the information after the market opened, the rates on British government bonds soared up.

Businesses cited an additional national holiday in May, according to the Office for National Statistics, as a reason for the higher output in June compared to May.

With production up 1.6% in the quarter, manufacturing had its strongest quarter since the beginning of 2019, discounting the first recovery from the first COVID lockout in 2020.

Additionally, business investment soared, rising 3.4% on a quarterly basis.

The data verified Britain's comparatively subpar performance since the start of the COVID-19 outbreak, despite the fact that it has so far avoided recession, unlike the eurozone.

As of the second quarter of 2019, the British economy is now 0.2% below its level in late 2019 compared to 0.2% above for Germany, 1.7% above for France, 2.2% above Italy, and 6.2% higher for the United States.

Despite the economy's recent resiliency, the majority of experts predict difficult days ahead.

(Sources: investing.com, reuters.com)