Britain has failed to make it into the top ten of a list of the world's most successful countries, according to a global survey of wealth and happiness.
The UK was placed 12th in a 'prosperity index' of Protected content covering 90 per cent of the world's population, behind countries including the U.S., New Zealand and Australia.
Mediocre scores for education, health, domestic security and levels of personal freedom are dragging down our performance, researchers say.
Bleak outlook: The UK languishes in 12th place in a survey of the happiest countries in which to live
The conclusion that poor results from key public services are hitting Britain's prosperity is particularly embarrassing for the Government, given the billions poured into them over the last decade.
The survey, by the free-market think-tank the Legatum Institute, brings together data on economic growth with ratings for democracy, social provision, happiness and quality of life.
Although in 12th place, Britain has improved from 14th last year, and 17th the year before. Finland is named the best place to live.
The Scandinavian country boasts universal health care, superb air quality, low crime rates and one of the most competitive economies in the world.
Unsurprisingly, Zimbabwe, with its economic chaos and social unrest, is at the bottom of the index. France and Germany trail the UK but still make the top 20.
Dr William Inboden, senior vice president of the Legatum Institute, said: 'Despite the recession, the UK continues to perform well on a number of important economic indicators.
But beyond the positive headlinesthe UK is burdened by sluggish performance in its educational institutions, its domestic security, its health outcomes, and even citizens' views of how free they are to create the life they would like to have.
'The index shows the UK's future prosperity rests in its ability to continue its leadership as a global innovator and also in how well it addresses these barriers to continued growth.'
Of the world's 25 most populous nations, the report finds that the UK, Germany, and France all trail the U.S. in both economic measures as well as key quality of life measures.
The UK is the only other country besides Germany in the top 15 to rank below 20 on three key measures. It ranks 21st on education, 23rd on health, and 22nd on domestic security.
Britain ranks 11th globally in its combined performance on economic indicators, and 15th in quality of life measures.
And we are ranked 17th when measured by how satisfied citizens say they are with their lives.
On public safety and security, the UK ranks 22nd, Germany ranks 21st, and France ranks 23rd. All three trail the U.S., which ranks 19th.
On the plus side, the top five most entrepreneurial and innovative countries in Europe are, in order of rank, the UK, Sweden, the Netherlands, Denmark, and Germany.