Whats interesting about this Google acquisition is what are they going to use this engine for? What are they going to do with it? said Mr Lynch. It will either turn out to be a piece of genius as an acquisition, or it will turn out to be a piece of lunacy, well just have to wait and see.

Machine learning refers to the ability of computers to learn from data. For example, a machine learning system could be trained to distinguish between spam emails and non-spam emails, and then be used to classify new email messages into spam and non-spam folders.

Its not just about learning to identify what it is, but learning to identify what it means, and understanding the relationship between different pieces of information, said Andrew Anderson, chief executive of UK artificial intelligence company, Celaton.

AI has a wide range of potential applications -- from virtual assistants like Apple Siri, which can interpret and answer questions, to cars that can automatically recognise road signs and games consoles like Xbox Kinect, which can read and understand 3D body movements. Some medical diagnosis and fraud detection techniques also employ machine learning.

Britain has some of the best research groups in the world, including Cambridge, Imperial and University College London (UCL), and is a growing centre for tech entrepreneurship. But companies specialising in AI are few and far between, and those that do exist tend to be focused in one particular area.

Googles acquisition of DeepMind has shone a light on this relatively nascent commercial sector, and Ben Medlock, co-founder of AI firm SwiftKey, believes that the UK is capable of building sustainable AI businesses to rival the giants of the West Coast.

The UK has a great heritage in AI, stemming back to giants such as Alan Turing, one of the undisputed fathers of the field, said Medlock. Our goal over the next few years should be to capitalise on our AI heritage and world class talent.

Some experts have warned that artificial intelligence could lead to mass unemployment. Dr Stuart Armstrong, from the Future of Humanity Institute at the University of Oxford, said computers had the potential to take over peoples jobs at a faster rate than new roles could be created.

He cited logistics, administration and insurance underwriting as professions that were particularly vulnerable to the development of artificial intelligence.

However, Anderson said AI is not all about hacking the workforce to pieces. Rather it is about making individuals more productive, and making sure that processes get applied, stuff is accurate, errors are eliminated, and compliance is met. Analyst firm Gartner predicts that 'smart machines will have a widespread impact on businesses by 2020.

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Artificial intelligence: the companies behind Britain's 'smart' revolution