05 Nov 2009

Who can be trusted after the financial crisis?

Felix Roth

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This study attempts to assess the extent to which the financial crisis has damaged citizens’ trust in public institutions, especially the confidence that European citizens invest in the European institutions. The results of major public opinion surveys show a severe decrease in citizens’ trust in the immediate aftermath of the financial crisis with a slight recovery nine month later. In particular, citizens’ net trust in the European Central Bank hit an historical low point in the aftermath of the financial crisis with a majority of people distrusting that institution. A variety of other surveys also show that confidence levels in the free market economy have decreased in most of the largest economies and demand for stronger state regulation has increased on both sides of the Atlantic. The key question now is whether this loss of confidence is a temporary or permanent phenomenon, which would have important consequences for the economy and for the proper working of the European institutions.