The report, AI activity in UK Business, said that by 2040, the overall adoption rate could reach 34.8%, with 1.3 million businesses using AI.

Spending by business on AI could rise from £16.7bn in 2020 to between £27.2bn and £35.6bn by 2025, the report added, rising to £83.5 billion in 2040 at a compound annual growth rate of 8.4%.

Expenditure on AI-related labour could increase from £46bn to between £80.2bn and £103.2bn by 2025, at annual growth rates of roughly 11.7% and 17.5% respectively.

The research was carried out by Capital Economics and commissioned by the DCMS to model and report on the current and future use of AI by UK businesses.

The study is based on a combination of existing literature and survey evidence, official statistics, discussions with staff at the DCMS and an original survey of businesses.

The research found that 432,000 companies have adopted at least one AI technology – around 15% of companies in the country.

Around 2% of businesses are currently piloting AI and 10% plan to adopt at least one AI technology in the future, equating to 62,000 and 292,000 businesses respectively.

The IT and telecommunications and legal industries had the highest rates of IT adoption at around 29% each, with retail, hospitality and health having the lowest rates of adoption at around 11%.

Approximately 40% of businesses developed AI tools in-house, while 40% of firms purchase ‘off-the-shelf’ tools and the remaining 20% outsourced the development of AI to external providers.