EU regulations are blocking business expansion and competition and are unfairly affecting small firms, according to a survey by Birmingham Chamber of Commerce and industry.
And businesses also believe that rules from Brussels are restricting the creation of new jobs and are generating excessively high costs.
The majority of firms said the cost of conforming to EU regulations was disproportionately high, while 88 per cent felt that poor quality rules and procedures were hindering job creation.
Abiding by the regulations was also cited as a major factor in wasting vital time and energy that could otherwise be concentrated on boosting profits.
With a number of regulations coming on stream in the near future, three quarters of respondents said that EU employment law was the area over which they had the most concern.
Half also had worries over health and safety laws, while 50 per cent felt unease over current environmental procedures.
The drafting procedure of new EU rules was the biggest worry for nearly 90 per cent of people and they insisted the European Commission should be more sensitive to the needs of businesses, in particular SMEs which many felt were disproportionately affected by EU legislation.
The EC is attempting to gauge the views of business opinion ahead of the launch of a major programme in October, which aims to simplify existing EU rules and procedures.
The Government's own Better Regulation Taskforce has previously indicated that the total cost of business regulation to the UK economy could be over 10.9 per cent of GDP, more than the money raised by income tax.
James Cooper, policy officer at the Chamber, said: "The survey underlines the two-fold problem facing small businesses - the EU's insistence on over-regulation and the Government's policy of falling in line with it all.
"Small companies do not have the time or resource to properly comply with all that the EU hurl at them and there is a case for the UK to put the blue pencil through quite a lot of it and not just gold-plate the regulations."