The Bank of England has cut its 2011 UK economic growth forecast to about 1.4% from a previous prediction of 1.8%, blaming risks from the euro zone debt crisis. 'The outlook for output growth remains highly uncertain,' it said in a quarterly report which added that there was a 'good chance' that the annual inflation rate in the UK would hit 5%, way above target, by the end of the year. 'The greatest risks to the prospects for global demand come from the euro area and the substantial challenges faced by several member countries as they seek to ensure the sustainability of their fiscal positions and to preserve the stability of their banking systems,' it said. 'Were they to crystallise, the risks emanating from the euro area have the potential to have a significant impact on the UK economy.' BoE governor Mervyn King blamed concerns over indebtedness in the euro zone and disappointing growth and fiscal policy in the US for a sharp downturn in the market mood. 'The outlook for growth in the world economy has deteriorated and, largely as a consequence, near-term growth prospects at home are somewhat weaker,' he added. The bank also noted that the Japanese tsunami and rises in oil prices had depressed growth in the short term and warned that some of the slowdown will be more persistent. 'There are a number of headwinds to world and domestic growth over the forecast period, not least the private and public debt overhang. And these headwinds are becoming stronger by the day,' the BoE governor said.