Some areas of Britain you could mistake for a thirdworld (more so called developing nation these days), but these are run-down poor areas and high unemployment rates, high crime. However, this can also apply to other countries, such as high-crime areas or towns of major American Cities (LA/NY being good examples).
The country does have a big footing in the EU though, and it's cultural influence and English language gives it a boost in power, and what with the Commonwealth and USA supporting the UK, it shouldn't be mistaken as a weak power as the army is said to be the best trained in the world, and has backup from the USA/NATO/EU/Commonwealth. The Queen is theoretically the most powerful woman in the world, and although she does not exercise it, she may very well do so at a time of World War.
The Quality of Life has decreased yes, and the country isn't as good as it used to be, but these are down to poor political decisions. Although we have the major financial capital in the world, best research universities, a strong economy based on service, and the busiest airport (Heathrow) we've still got a long way to go.
If you look at the rankings of quality of life, we have slipped a lot over this decade, and now rank in the mid-20s of move liveable nations. Because we're an island nation, we can't really expand much and so we have smaller portions of things compared to the USA who get similar things to us but in larger sizes, and this attracts people from all around the world, causing a brain drain in our community.
The USA, and certainly other nations or cities, attract people with HUGE salaries (average salary for Britain is $35k roughly, paling in comparison to USA, Hong Kong whom have $45k roughly), because the USA is more generous with money and best university education in the world they attract the brighest of people to that country or at least those who see the standards of Britain failing hop off to a better country.
The USA ranks very high in quality of life (4th as of 2010) and is the most powerful nation in the world - but it too has problems of its own, and China is set to overtake the USA's economy and it even has control of certain banks in the USA, so by the end of the century our grandchildren may be learning Mandarin at school.
The UK itself is weak, but united with the USA/EU/Commonwealth, it remains strong and shouldn't be mistaken for its size, as the British Empire has proven. Plus, as we are the biggest ally to the USA, the world is watching us closely too, and our pound remains very strong in comparison to the dollar.