The Netherlands will not reach its target of investing 2.5% of GDP on research and development unless government and the private sector increase their financial contributions, according to the chairman of research institute TNO.

Paul de Krom told the Financieele Dagblad on Saturday that R&D budgets have been going down rather than up and now stand at around 1.98% of GDP.

‘Collectively, we don’t spend enough on R&D,’ he said. ‘I am not saying this because it is in the interests of the TNO but because we are talking about the Netherlands’ future earnings potential.’

Figures from the scientific advisory Rathneau Institute show the government should invest a further €700m a year on top of the €4.5bn it already spends while the private sector needs to up its investment by €4bn to €10bn.

Not only is the Netherlands failing to meet its 2.5% target, but that target is well below other EU countries, the FD said.

This is partly because the Netherlands has a history of strong performance in services and agriculture, both of which have lower R&D investment than industry.