UK financial vulnerability outlook for winter 2026/27

Economic conditions are improving for many UK households, but that does not tell the whole story.

Key takeaway: Using Baringa's proprietary Financial Vulnerability Model, which assesses household income, savings and essential expenditure across approximately 28 million UK households, our latest outlook reveals a growing concentration of vulnerability beneath the national averages. While headline vulnerability remains broadly stable, a hardening core of households is becoming increasingly exposed to persistent cost pressures, limited financial resilience and rising debt burdens.

For energy suppliers, water companies, regulators and policymakers, understanding where vulnerability is concentrated, how it is evolving and what it means for future debt and affordability outcomes has never been more important.

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The outlook for UK household vulnerability

Following years of economic volatility, the outlook for UK household vulnerability is for modest reductions year on year, but with a hardening core of extreme vulnerability. Headline vulnerability is expected to remain broadly unchanged at around 23%, with wage growth now outpacing essential cost growth for many households. However, beneath these encouraging national indicators, financial pressures remain concentrated among those least able to absorb them.

Baringa's analysis shows that single parents, young renters and low-income couples continue to face the greatest challenges as elevated household costs and labour market pressures erode financial resilience. Rather than seeing households move out of vulnerability, we are increasingly seeing vulnerability become concentrated within a smaller group of financially exposed consumers.

The implications extend beyond household finances. While the number of households in energy debt is forecast to fall, debt is becoming increasingly concentrated among customers with the lowest capacity to repay. As a result, total energy debt is forecast to increase by more than £2bn by Q1 2028, presenting growing challenges for suppliers, regulators and policymakers seeking to balance affordability, customer outcomes and financial sustainability.

These findings underline a single message: while the macroeconomic outlook is improving, financial vulnerability is becoming more entrenched. Understanding where vulnerability exists today, and where it is likely to emerge tomorrow, will be critical for organisations seeking to support customers effectively and manage future affordability and debt risks.