Gareth Southgate insisted England have not gone backwards after a 2-0 defeat to Belgium on Sunday ensured they cannot reach the Nations League finals next year.
First-half goals from Youri Tielemans and Dries Mertens for the world's number one ranked side in Leuven kept Belgium on top of Group A2, five points clear of third-placed England, with one game to play.
Southgate's men reached the semi-finals of the inaugural Nations League, but have now suffered back-to-back competitive defeats for the first time since September 2018.
England dominated for long spells after conceding twice in the opening 24 minutes, but failed to make it count with more questions asked of Southgate's switch from a 4-3-3 formation that saw the Three Lions score 37 goals in eight games in qualifying for Euro 2020, to a 5-2-3 that has reaped just three goals in five Nations League games.
"Although we don't like losing and didn't want to go out of the competition, the level of performance was excellent," said Southgate.
"I have to focus on performances and if you get performances right, you will normally win matches.
"I'm really pleased with the progress. In the last two matches, I don't think we've got what we deserved but those are the fine margins of knockout football."
Denmark's late winner over Iceland means Belgium still need a point when they host the Danes on Wednesday to secure their place in the Nations League semi-finals in October 2021.
"The best team on the pitch was Belgium," said Belgium boss Roberto Martinez. "We were very clinical then when you go 2-0 up, we managed the game a little bit better.
"England had a lot of possession but at that point you have to give credit to England. They took risks, pressed high but we defended very well."
Despite the absence of Marcus Rashford and Raheem Sterling through injury, Borussia Dortmund's Jadon Sancho was left on the bench for England in favour of Jack Grealish and Mason Mount.
Southgate has previously resisted the clamour for Grealish to be given his chance on the international stage, but he hailed the Aston Villa midfielder's impact on his first competitive start.
"I just thought he was outstanding and he should be delighted with the way he played," added Southgate.
"I explained to him what we wanted to see when we brought him in in September. It's been helpful for him to bed into the group so he knows the way we want to play and the players get an understanding with him.
"Today was a great game to see him at that level and I couldn't speak highly enough of his performance."
Belgium had gone in front early when the sides met at Wembley last month only to be pegged back and lose, but England could not repeat that trick after Leicester midfielder Tielemans's deflected effort went in off the post after 10 minutes.
Romelu Lukaku had scored 15 times in his last 12 internationals, but it was at the other end that the Inter Milan striker made his most significant contribution with a fine header off the line to deny Harry Kane an immediate equaliser on his 50th cap.
Midway through the half, the visitors had a mountain to climb.
Declan Rice was harshly punished for a challenge on Kevin De Bruyne just outside the area and Mertens curled the resulting free-kick perfectly over the wall to give Jordan Pickford no chance.
Belgium were then happy to sit on their lead and could have been punished with better finishing from Southgate's men as Mount turned Grealish's dangerous cross before Kane was twice denied by Thibaut Courtois.