The Dutch economy is beginning to recover but banks remain vulnerable and small firms do not have sufficient access to credit, the Paris based OECD said in a new report on the Netherlands on Thursday.

The lack of funding it putting a break on innovation and that will impact future economic growth, the OECD said.

‘It is also necessary to boost investment in green infrastructure and support a shift towards renewable energy,’ the report states. ‘Lifting investment in research and development would help the Netherlands to remain among the innovation front-runners.’

In addition, if the housing market continues to recover, more needs to be done to limit how mortgages are set off against tax, the Paris based body said.

The organisation is concerned that so many people mortgage which is higher than the value of their property. Banks also need to be made more resident to the impact of a drop in property prices.

The OECD publishes a report on the Dutch economy every two years.

Economic affairs minister Henk Kamp welcomed the OECD’s recommendations, saying they are ‘useful’.

‘Innovation increases productivity and that leads to stronger growth and prosperity,’ he said. In general, the OECD is happy about the reforms which the Netherlands has introduced, he said. ‘The Dutch economy is showing modest but continual growth,’ he said. ‘We are well positioned for the future.’