One of the reasons why European goods are more expensive is the higher tax rate and the very high £/$ or Euro/$ exchange rates. The £400 UK PS3 includes a whopping 17.5% tax. The price you see on the box is what you pay in the store. £60 of that is just tax (V.A.T). In the USA tax is added on at the checkout in stores and varies in each state. Where I used to live in Massachusetts a $600 PS3 would actually cost $630 at the checkout. New York city it would be $650. Some states like New Hampshire have no sales tax so it would still be $600. Sales tax is not added when you buy from websites based out of state.
Currently the exchange rates for the Pound and Euro are very high against the Dollar and near record highs due to economic reasons. I remember the exchange rate by $1.5 to the pound instead of $2 as it is now.
The UK's prices would still be higher but considering the tax differences and unusually high exchange rate helps explain the huge difference.
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