By Peter Griffiths
LONDON (Reuters) - European Union regulation is strangling economic growth and costing the continent billions of euros, according to a British government-backed report on Tuesday that Prime Minister David Cameron hopes will bolster his case for reform of the bloc.
Cameron set up the review of EU red tape in June, addressing one of the biggest grievances of British Euroskeptics who complain that the 28-nation bloc's rules are often petty, interfering and expensive to implement.
"All too often, EU rules are a handicap for firms," 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 regulation will be central to Cameron's campaign to reshape the EU and Britain's place in Europe before a promised referendum on its continued membership of the bloc.
His hopes of winning the 2015 election 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 centre-right vote and benefit the opposition Labour party.
Across Europe, trust in the EU's institutions has fallen since the start of the financial crisis. In one recent poll, 60 percent of Europeans "tended not to trust the EU", up from 32 percent in early 2007 before the crisis.
The European Commission, the EU's executive, said this month it would pare back EU rules to answer critics' accusations that it over-regulates.
Responding to the British report on Tuesday, Commission President Jose Manuel Barroso said Brussels had scrapped more than 5,000 laws and rules over the past five years.
"Common rules are essential to make the single market work properly, but I also want to make sure that the EU does not meddle where it should not," said Barroso, a Portuguese.
Cameron will press his case for reform at next week's meeting of European leaders in Brussels.
The report, compiled by a panel of six business leaders and chaired by Business Minister Michael Fallon, said there were too many "pointless, burdensome and costly regulations".
It made more than 30 recommendations, 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 firms to keep health and safety records could save 2.7 billion euros ($3.67 billion), it said.
Business lobby groups said the ideas would simplify companies' operations, make it easier to hire staff and encourage investment.
Union leaders, however, said it would erode workers' rights.
"None of these policies have anything to do with economic growth and are instead about certain business leaders' desire to worsen people's basic working conditions, egged on by the government," said Frances O'Grady, head of Britain's Trades Union Congress.
Since joining the EU's forerunner in 1973, British Euroskeptics have grumbled about "meddling Eurocrats" in Brussels imposing rules. Anti-EU newspapers ridicule and sometimes distort the details, prompting the Commission to issue rebuttals on its own "Euro Myths" website.
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(Additional reporting by Luke Baker in Brussels; Editing by Gareth Jones)