Its relatively poor standing was blamed on its bad weather, high cost of living, poor transport infrastructure and health service.
As a result, Britain was narrowly beaten even by former eastern bloc states Bulgaria, the Czech Republic and Slovakia, which were judged to have better weather and a lower cost of living. However, the UK scored higher for its economy and social freedoms.
France topped the list of 191 countries compiled by International Living magazine as the nation with the best quality of life, followed by Australia, Holland, New Zealand and the United States. The five worst places on earth to live were the hot spots of Iraq, Somalia, Yemen, Sudan and Afghanistan.
The countries were rated on nine categories: cost of living, culture and leisure, economy, environment, freedom, health, infrastructure, safety and risk, and climate.
France scored extra points thanks to its high-speed TGV trains, spare hospital beds, culture, ski resorts, beaches and warmer climate.
Italy, which was eighth, scored a perfect 100 for its culture, with its climate, lower cost of living and transport service also bumping it up the rankings.
Britain was also trounced by many other European countries deemed to have similar weather, such as Holland, Denmark, Luxembourg and Liechtenstein, and by Germany, because it was seen to have a better health service and better infrastructure.
Graham Birse, a former Edinburgh tourism marketing chief, said that he believed Scotland would have fared better if it had been considered separately from the rest of the UK.
"I'm sure it would have come higher than England," he said. "The quality of life in Scotland and visitor experience is better than elsewhere in the UK. Just look at Perth - it was recently voted as being the most attractive place to live in the UK."
Elliott Frisby, a spokesman for VisitBritain, said of the survey: "It's very easy for one survey to say one thing, and then another contradict it. For instance, the Nation Brand Index looks at similar aspects of 35 countries around the world, and it placed Britain at number one, followed by Germany and France.
"Also, the lack of regional breakdown doesn't reflect the diversity within Britain."
Panama (34th), Mexico (25th) and Argentina (tenth) all stormed up the list thanks to their low cost of living and increased safety compared with previous years, as well as their natural environment and climate.
The most dangerous place on earth was deemed to be the Iraqi capital, Baghdad; the cheapest was the Pacific island of Nauru; the most expensive was Norway, the best infrastructure was in the US, and Zimbabwe had the best weather.
The Caribbean state of Haiti was said to be the most corrupt place on earth. People lived the longest (an average of 82.5 years) in Andorra, and Australia was the best place to register a new company.
Laura Sheridan, of International Living, said: "France came top because it has a good climate, unspoiled countryside, and great health care.
"And its capital, Paris, is arguably the most beautiful and romantic city on earth.
"Add to all this the world-competitive infrastructure and you can understand why we'd name France the world's best place to live."
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