Intermediaries are becoming less worried about of the effects of inflation and more favourable towards the UK’s economic outlook, according to the latest investment survey from Barings Asset Management.

The London-headquartered firm surveyed 78 investment professionals between May and June of this year.

The Barings Investment Barometer found that one in five (21 per cent) intermediaries cited the risk of inflation as the biggest global macroeconomic challenge to investment growth in the next six months, compared to a third (32 per cent) in the previous quarter.

Around half (53 per cent) of intermediaries expect the UK economy to experience inflation over the next three years, down from nearly three in five (58 per cent) in the first quarter.

Just over a third (36 per cent) of intermediaries predicted stagflation, slightly down (from 37 per cent) from three months ago.

Overall, intermediaries remain positive towards UK equities, with 87 per cent saying they were favourable or very favourable towards the asset class.

“Considering the uncertain environment in the eurozone, it is unsurprising that intermediaries are still concerned about overall global economic health. However, in the UK there is a growing sense of optimism, culminating in more interest towards UK assets. Our research shows that the perhaps the shackles are loosening," said Rod Aldridge, head of UK wholesale distribution at Barings.

The survey also revealed that nearly half (47 per cent) of the respondents believed slowing growth in China is the biggest macroeconomic challenge to investment growth over the next six months, - a significant increase from one in five (21 per cent) in the previous quarter. As a result, positive sentiment towards Asian equities (excluding Japan) fell from 97 per cent to 84 per cent.