Lack of trust in crisis countries

Crises like the ones in global finance markets and in the European monetary union tend to have one thing in common: they are caused, or at least aggravated, by a lack of trust. This is also evident when looking at the current Greek crisis, as indicated by the new trust index developed by the Cologne Institute for Economic Research (IW).

Trust is the basis of all relationships between people and economies. But what about people’s trust in individual countries? And how has the level of trust evolved in recent years? With its new trust index, Cologne-based IW has looked into this matter by measuring and comparing levels of trust in 20 European countries. In the overall ranking, Denmark, Sweden and Finland occupied the first three positions. In the European trust comparison for 2014, Germany ranks seventh, with a particularly high score in the level of trust in its economic system. However, Germany also ranks in the top ten in the other two categories, trust in the political system and trust in the societal system.

For Greece, however, results are very different. Following the financial crisis, the country suffered a severe loss in trust. While Greece still ranked 15 in the year 2000, levels of trust have steadily deteriorated since, meaning that Greece now comes last – in all three categories. Italy and Portugal also find themselves at the bottom of the trust index. However, this doesn’t mean that the people there are generally distrustful, explains IW economist Dominik Enste: “There is a lack of trust in the political and economic system. In people’s families and circles of friends, however, there may still be high levels of trust.”

For the trust index, Enste’s team of IW economists have gathered various survey and market data on the topic of trust, establishing an international comparison of trends over the last 14 years.

Germany in position 7

Points on a scale from 0 to 100

Sources: World Bank, European Commission, ESS, Eurobarometer, OECD, Bloomberg; Cologne Institute for Economic Research