You should get no surprises.
Every Co. of any size and every public sector employer in the UK can and most do record every e-mail. It is easy to do, and it is a defence against future possible legal cases.
The vast majority know exactly where you've been on the net, too.
In the UK the employer has to notify the employee if they are going to intercept their mail - failure to do this could leave the company open to litigation (Unless gross misconduct has been identified). However a company may store (not read) any of your correspondence in case a business related issue arise whereby they will require the authors permission should they still be with the company. Most companies have the provision for reading of mail within the employment contract nowadays.
Email is a business tool, and as such can be viewed as a tool provided by and owned by the business - the way to keep your privacy is to use one of the plethora of web based mail accounts. Another way to keep your mail private would be to PGP encrypt any personal mail.