Enhancing private investment in the Netherlands

Investment has rebounded during the recent economic revival, but from a low level. The investment slump during the crisis was mostly caused by a fall in residential investment. However, business investment has been trending downwards since 1990, holding back capital stock accumulation and productivity. Raising residential investment is necessary to meet the growing demand, and in particular more private rental housing is needed as the current small stock, which reflects rental regulation and other housing policies, hampers the functioning of the housing market. Financing of owner-occupied housing can be made more resilient by stepping up measures taken after the crisis. Regarding business investment, further reinforcing the already good framework conditions would help to turn its cyclical upswing into a durably higher level. Meeting targets on R&ampD expenditure and renewable energy requires lifting investments in the related areas. Financing conditions, which are widely perceived as an important bottleneck, could be improved by stimulating competition in the banking sector and the development of alternative financing sources.