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U.K. families unaffected by job losses have enjoyed a 25 percent increase in spending money in the past year after mortgage costs and energy bills fell, Ernst & Young said.

The disposable income of the average household, assuming no change in employment status, rose by 200 pounds ($327) a month, the business advisory firm said in a report today. Homeowners benefited after the Bank of England cut the key rate to a record low of 0.5 percent, curbing mortgage costs. Gasoline, gas and electricity bills also fell.

“Even though we’re still in recession, many U.K. householders who have not been hit by unemployment have experienced a dramatic upturn in their monthly budgets over the last year,” Jason Gordon, retail director at Ernst & Young, said in the statement.

Rising unemployment and the worst recession in a generation will probably encourage consumers to pay back debt than spend their extra wealth in the shops, Ernst & Young said. U.K. retail sales unexpectedly dropped in May for the first time in three months, the Office for National Statistics said today.

Waitrose Ltd no teletrack payday loans., the U.K. supermarket chain owned by John Lewis Partnership Plc, still said today it expects revenue to rise faster than the average increase in food sales in Britain this year as the company cuts prices.

Spending Money

The average household has 1,075 pounds to spend every month after paying bills, Ernst & Young said. That amounts to 27 percent of gross income, compared with 22 percent last year.

Weaker home values, which the Bank of England estimates have declined about 20 percent, may still have eroded households’ overall wealth, the report showed.

A surge in oil prices may lift utility bills in the months ahead. Brent crude oil futures traded at $71.66 a barrel today, almost double the low of $36.20 reached on Dec. 24.

Unemployment rose to the highest since 1996 in the quarter through April and the Confederation of British Industry predicted this week that as many as 3 million consumers will be without work by the middle of 2010.

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