The loss of the U.K.’s financial power and expertise as a result of Brexit is likely to exacerbate the European Union’s lag in the global technological arms race, according to Anders Borg, a former Swedish finance minister and senior adviser at artificial intelligence company Ipsoft Inc.

“Brexit entails several layers of problems,” Borg said in an interview in Stockholm. “Technological development is being driven by the financial sector and, to a large extent, Europe’s financial sector is London. So it’s not the British financial system that is now being put on hold, it’s Europe’s.”

Britain is home to a third of artificial-intelligence startups in Europe, according to a report by MMC Ventures in association with Barclays, which dubs the country “the powerhouse” of European AI. Europe is already slipping behind China and the U.S., which invest much more in AI systems, Borg said.

Another key issue involves 5G, which provides the additional bandwidth needed to carry the vast amounts of data necessary for AI development. The networks will form the “backbone” of the new digital economy, Borg said.

As the U.S. and Chinese telecoms operators prepare to launch their 5G services, many European carriers have yet to secure the crucial spectrum needed to build new infrastructure.

According to Borg, Europe should allow more consolidation in the telecom sector to avoid the risk of remaining permanently behind due to its lower level of investments and a much heavier regulatory burden.