The recession and global economic crisis has had a "profound impact on people's well-being", according to the Organisation for Economic Co-operation and Development (OECD).
In an update to its Better Life Index measure of well-being, the OECD said people's well-being deteriorated in countries most affected by the crisis. For example, between 2007 and 2012, average "life satisfaction" declined by more than 20% in Greece, 12% in Spain, and 10% in Italy. But moderate increases were recorded in Germany, Israel, Russia, Mexico and Sweden.
The OECD said the average British household has only been "modestly affected" by the crisis, in particular in the areas of jobs, life satisfaction and civic engagement. UK households experienced a rise in disposable income of 1% between 2007 and 2001, compared to a fall of 2% in the Euro area.
But the UK's employment rate fell by almost two percentage points, while the long-term unemployment rate increased by almost 2 percentage points between 2007 and 2012. However, the percentage of Brits who said they were very satisfied with their lives increased from 63% to 64%.
While the percentage of British people who state they trust their government rose from 36% to 47% between 2007 and 2011, citizens in the hardest-hit countries in Europe have lost trust in their governments and institutions.
The percentage of people in these countries claiming to trust national government fell by ten percentage points in the five years leading to 2012. In the OECD countries as a whole, less than half of those surveyed said they trusted their governments – the lowest level recorded since 2006.
"This report is wake-up call to us all," said OECD Secretary-General Angel Gurría. "It is a reminder that the central purpose of economic policies is to improve people's lives. We need to rethink how to place people's needs at the heart of policy-making".
Work has a major influence on well-being, the OECD report indicates, which is why people in many countries hit by the recession have experienced deteriorating well-being.
The data also show that the gender gap in favour of men has narrowed, but has not disappeared. "Women still generally fall behind in terms of income, but measuring well-being based on gender reveals a more complex picture," the report states. "Girls are now generally doing better than boys in school, although still remain under-represented in fields that provide greater job opportunities."