After the Northern Rock crisis and the lost data scandal, you thought it couldn't get any worse...

Come back Sven, all is forgiven. The was the only half-joke among otherwise despairing England fans last night, as the slow-motion realisation that theirs is a second-rate international side became depressingly clear when a performance crippled by Steve McClaren's very personal decisions resulted in a 3-2 defeat against Croatia and failure to qualify for Euro 2008.

The coach's poor handling of English football only added to a sense of the winter blues last night, following the Northern Rock crisis and the current scandal over lost data discs, as the man who said his job was "lonely" faced the full backlash of fans' famously high expectations.

A hopeful crowd greeted the team before kick off, and McClaren appeared to have gained in confidence after receiving the dubious support of former managers, including Graham Taylor, in recent weeks. But within minutes the fans' worst fears were realised as Scott Carson, who had replaced the regular goalkeeper, Paul Robinson, to the bemusement of some, fumbled a speculative long-distance strike to leave England trailing.

After what was described by Gary Lineker as "a desperately bad night for English football", the beleaguered manager – who had earlier admitted there were "no excuses" for the first failure to make a major tournament's finals since 1994 – could not escape blame after a string of fateful gambles appeared directly responsible for his side crashing out at Wembley.

And blame he got, in abundance, from the stream of supporters emerging out of a nerve-wracking match, leaving 7,000 Croatian fans jumping for joy.

Outside the stadium, England fans shouted "McClaren out" and sang "You'll be sacked in the morning", following his insistance he was " not stepping down". The chief executive of the Football Association, Brian Barwick, remained tight lipped, saying only that it was "very disappointing night".

The fans went further, and Nick, 20, a lifeguard, said of the team: " They were an absolute disgrace, there was no passion or pride in them." Mat McLaughlan, a quantity surveyor from Ipswich, criticised McClaren for barely emerging from the dugout and joked: "Bring back Sven."

As a result of all four home nations failing to make the Euro 2008 finals in Austria and Switzerland next year, it was predicted that the British economy could lose out on £1.5bn.

David Southwell, an independent retail consultant, said: "Major tournaments are a marketing opportunity, with all the sponsorship and hype, especially for supermarkets who sell a lot of alcohol. There will be a lot of retail executives unhappy tonight because the potential revenue and boost that was expected, especially in 2008 which is expected to be a slow year for retail, will now not happen."

The boos echoed across the water-logged pitch before half time and, despite a brief respite when David Beckham – dropped by McClaren for his first game in charge – joined the fray and England drew level, they soon rang out again after the final whistle.

In contrast to the soaked English followers, Croatian fans, packed into the Cadogan Arms in Chelsea, west London, created an "electric atmosphere". Kieran McBride, the pub's assistant manager, said: "When their third goal went in it was electric, the whole place lifted, the roof nearly came off. We've got about 150 Croatian fans in here ... It's very jovial, the English fans have gone, and the rest are just partying."

After the final whistle, it became clear that McClaren's last chance – Russia losing to Andorra – wasn't going to happen.