The 20th annual Trust Barometer found pessimism is being fuelled by a growing sense of inequity, unethical business practices, dishonest politicians, and fear the pace of technological change.
The study, which polled 34,000 respondents in 28 markets, found only Russia ranked below the UK on trust.
Nearly a third of UK respondents feared they will be worse off in five years' time, three in five had lost faith in democracy, and more than half believed capitalism does more harm than good. The public blamed politicians for creating an environment of fear for their own political gain.
Ed Williams, president and chief executive of Edelman EMEA, said: "Capitalism is in the dock and people are questioning the effectiveness of democracy. Political and business leaders need to raise their ethical standards, partner on the big issues, and deliver tangible change in the people's lives if they are to build the trust of the British public."
A quarter of the UK respondents thought politicians who lie should end up in jail, although a significant proportion take a more pragmatic attitude and tolerate deceit if it supports causes they believe in.
This moral flexibility and complicity is almost twice as likely to be found among the better-informed and wealthier people in society than in those on the lowest incomes.
Despite all this, there are signs that the nation has turned a corner on Brexit and there is an opportunity to build trust. The NHS, crime, and improving the standard of living are concerns shared by between 80 and 85 per cent of the population.
In adddition, since the Conservative Party's election victory, the findings show a big drop in the number of people saying that the country is on the wrong track, and trust in government has risen by 10 per cent.
Politicians and capitalism under pressure
Despite some signs of optimism, only nine per cent of people said their views are "well represented" in UK politics, and only 19 per cent believed their fellow citizens are interested in the views of other people.
Two-thirds (67 per cent) said they believed the conduct of politicians is making society more divided. A similar proportion (66 per cent) agreed that the behaviour of the political classes, who are prepared to undermine national institutions for their own gain, undermined trust in government.
More than half of the UK respondents agreed with the statement: "Capitalism does greater harm than good in the world."
People want business to change how it operates and, as an institution in the UK, it is seen as unethical. Many people feel business is self-interested, and they are powerless to influence business behaviour. Asked about whether the various institutions acted fairly, the government scored -41 points, and business -32 points.
A majority of UK respondents believed the pace of technological change is too fast, and the government is inept and unprepared for effective regulation of technology.
However, trust in employers shines through, as the relationship with "my employer" remains the most trusted of all relationships that people have with the outside world.
Only seven per cent of respondents thought a company’s priority should be to serve shareholders.
The truth is complicated
For the first time, the public were asked for their reactions to the idea of politicians lying to the electorate. More than half thought that politicians today are more likely to be dishonest than those in the past.
UK respondents believed that their political leaders exploit issues mainly to attack opponents (67 per cent) or to create a climate of fear for their own ends (60 per cent), rather than being genuinely committed to solving the problems of the nation (29 per cent).
A majority thought politicians caught lying to the public should resign (59 per cent), while more than a third wanted mendacious politicians fined (34 per cent) and a quarter thought they should be jailed (24 per cent).
There are double standards, however. Almost half (48 per cent) of the general population agreed that there were circumstances in which it would be justifiable for a politician to lie, with the highest level of support for national security reasons and "Get Brexit done" (20 per cent), while a similar number said they would have no problem if a politician misled the public "to get the party I support elected".
Johnson more trusted than Corbyn
While neither of the main party leaders were trusted – Johnson had a trust score of 41 per cent, compared with 26 per cent for Jeremy Corbyn – following the election in December, nearly half of UK respondents said "we are on the right track", which is up 13 points from a year ago.
If the Prime Minister hopes to hold onto support lent to him by traditional Labour voters, it is clear he will need to make a real, quantifiable difference to the issues that matter most to electors – particularly healthcare and crime, the survey found.
Of the 12 policy areas the survey participants were asked about, the least pressing were said to be gender equality and protecting the rights of people from the LGBTQ+ community – but even so, these issues were important to more than half of UK respondents.
Nearly 80 per cent of people thought government and business should be collaborating to solve social issues.