Last updated at 20:00 06 January 2008

For the first time in more than 100 years, British living standards have risen above those of Americans, a report has declared.

Increasing incomes, longer holidays and "free" healthcare have all contributed to making Britons better off than our friends across the Atlantic, according to the respected Oxford Economics consultancy.

The feel-rich factor is calculated using the gross domestic product (GDP) per citizen - an indicator of average incomes - which in Britain will be £23,500 this year, compared with £23,250 in America, it predicts.

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Although this is partly due to the current strength of the pound against the dollar, it is also because of the UK economy's record run of growth and rising incomes going back to the early 1990s. And while Americans typically have only two weeks' holiday per year, Britons enjoy between four and six weeks as standard.

But the average Briton does not actually feel more wealthy than his or her American counterpart. Goods and services are cheaper in the U.S., meaning that even if they are earning less, they can afford to buy more.

However, Britain also beats France and Germany in the living standards league, with our GDP per capita more than eight per cent higher, Oxford Economics says.

Its managing director Adrian Cooper said: "The last 15 years have seen a dramatic change in the UK's economic performance and its position in the world economy.

"No longer are we the 'sick man of Europe'. Not only have we left Germany and France in our wake, our calculations reveal that UK living standards are now outstripping those of the U.S."

The improving position comes because of the unprecedented growth spurt Britain has enjoyed since the recession of the early 1990s.

Back then, British GDP per capita was 34 per cent lower than in the U.S., 33 per cent lower than in Germany and 26 per cent lower than in France, according to Oxford Economics.

Since then the financial services boom and soaring house prices have led to an uninterrupted expansion. By contrast, the U.S. and many European countries slid into recession in the early part of this decade.

The UK's strength also reflects recent gains against the U.S. dollar, which has the effect of boosting the value of our economic output.

But Mr Cooper said: "The UK has been catching up steadily with living standards in the U.S. since 2001, so it is a well-established trend rather than simply the result of currency fluctuations."

Americans have long complained that their incomes are stagnated.

Some economists there claim that in real terms the average male full-time salary is no higher now than it was in the 1970s.

However, the UK's success comes as fuel prices are soaring and many families face a period of belt-tightening.

Analysts at Citigroup predict the slowest rise in consumer spending this year since 1992.

Its economist Michael Saunders said: "The UK economy now faces a hangover, with slowing credit growth, falling property prices and tightening lending standards."