Britain has slipped two places down Europe's league table of living standards falling to sixth after being overtaken by Austria and Germany, the European Union's statistical body said.
With high inflation eroding spending power in Britain, Eurostat said actual individual consumption (AIC) per head dropped from 120% of the EU average in 2010 to 118% in 2011.
Eurostat, which looks at living standards for countries inside and outside the EU said that the top five countries for living standards in 2011 were Luxembourg (140% of the EU average), Norway (135%), Switzerland (130%), Germany (120%) and Austria (119%).
Inside the EU living standards were lowest in Bulgaria (45% of the EU average) and Romania (47%), although Europe's debt crisis has taken a heavy toll of AIC per head in Greece, where it has fallen from 104% of the EU average in 2009 to 91% in 2011.
Eurostat reported that there were smaller declines in living standards in the other countries at the centre of the sovereign debt storm – Ireland, Spain and Portugal.
AIC per head is often used as an alternative to gross domestic product as a way of measuring living standards, since it includes all the services that households consume, such as benefits in kind including health and education.
Using GDP per head as a yardstick, the UK was 10th in the EU table of living standards in 2011, a rating unchanged on the previous year. Luxembourg was comfortably the best off EU country on this measure, with GDP per head of 271% of the average, compared with 109% in Britain.
Eurostat's comparision of living costs showed that the UK was the 14th most expensive country in the EU in 2011, up from 15th most expensive in 2010. Prices were 3% above the EU average.
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