By Peter Griffiths
LONDON (Reuters) - European Union regulation is strangling economic growth and costing the continent billions of euros, according to a British government report on Tuesday that Prime Minister David Cameron hopes will bolster his case for reform of the 28-nation bloc.
Cameron set up the review of EU red tape in June, addressing one of the biggest grievances of British Eurosceptics who complain that the bloc's rules are often petty, interfering and expensive to implement.
"All too often, EU rules are a handicap for firms, hampering their efforts to succeed," Cameron said of the report. "There are lots of simple and practical ways to cut EU red tape and save businesses across Europe tens of billions of euros."
Reducing red tape will be central to Cameron's campaign to reshape the EU and Britain's place in Europe before a promised referendum on its membership of a group it joined 40 years ago.
His chances of winning a second term at the next election in 2015 depend in part on convincing wavering Conservative voters not to defect to the UK Independence Party, whose call to leave the EU could split the center-right vote and benefit the opposition Labour party.
Cameron said the report, compiled by six business leaders, suggested companies were forced to spend too much time complying with "pointless, burdensome and costly regulations".
The report made more than 30 recommendations to reduce regulation, in areas from shale gas extraction, licensing medicines and environmental safeguards to paid maternity leave and limits on working hours.
Scrapping the rule that forces companies to keep written records of health and safety risk assessments could save companies across the EU around 2.7 billion euros ($3.67 billion), it said, while abolishing EU barriers to trade in services could add an extra 1.8 percent to the single market's gross domestic product.
Trade union leaders have described Cameron's investigation into European regulation as "anti-EU rhetoric" that would erode workers' basic rights.
Trailing in the polls before the election, Cameron will send a copy of the report to every European leader and press his case at next week's meeting of the European Council in Brussels, a spokeswoman said. His argument will focus on making Europe more competitive, she added.
Since joining the EU's forerunner in 1973, British Eurosceptics have grumbled about "meddling Eurocrats" in Brussels imposing rules on them. Anti-EU newspapers ridicule and sometimes distort the details, prompting the European Commission to issue rebuttals on its own "Euro Myths" website.
In May, Cameron attacked a European Commission plan to ban restaurants from serving olive oil in jugs or dipping bowls as bizarre. The proposal was later dropped.
The Commission said earlier this month it would review existing EU laws and be careful when writing new ones.
Jose Manuel Barroso, president of the EU's executive, said it had cut the cost of administrative burdens by 32.3 billion euros over the last five years and scrapped 5,590 legal acts.
(Editing by Andrew Osborn and)