Britain has fallen down a global league table of prosperous countries, with countries like Denmark and Iceland now deemed better off.
The Legatum Prosperity Index, which annually assesses 142 countries on their "path to prosperity", concluded that the UK had fallen from 13th to 16th place, leaving it behind Austria (15th), Germany (14th), and Iceland (13th). Norway maintains its position as the most prosperous nation for the fifth year running.
The findings will not be welcomed by the coalition, after George Osborne recently declared that the UK was on the "path to prosperity", while David Cameron has repeatedly warned that the country needs to win a "global race" against other major economies.
This comes after a report by the World Economic Forum found that the UK had fallen from 8th to 10th as a globally competitive nation.
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According to Legatum's report, only 30% of Britons believed the economic situation was improving and just 10% think it is a good time to enter the job market.
Jeffrey Gedmin, President and CEO of the Legatum Institute, said: “The UK’s politicians must take action now or face the very real prospect of falling out of the top thirty most economically prosperous nations in the world."
The top 20 most prosperous countries in the world for 2013, according To Legatum
- New Zealand
- United States
- United Kingdom
- Hong Kong
The report warns that the UK has faced similar economic problems to the US, but it is enjoying a weaker recovery.
"America's future may be far brighter than the United Kingdom", the report reads.
"Both Britain and America have slid down the economy rankings for many of the same reasons; underinvestment, decreasing export competitiveness and high unemployment. Their decline reflects the fact that economic growth has been largely absent from Europe and North America since 2008.
"Compared with some other developed countries the US’s economy is beginning to look healthier than it has in the past. Despite some recent improvements in economic indicators, it is less certain that this is the case for the UK."