In the report Changing the rules - eight steps to a better regulatory regime, published today, the CBI has called on ministers to get a grip on the red tape and bureaucracy created in Whitehall.
It claims that urgent action is needed to tackle an ingrained culture of lack of thinking about the real impact of regulation on business.
The report shows that the net added cost of regulation on UK businesses will increase by £177.7m as a result of policies created in 2011 alone, when for every £3 of costs removed, another £5 was added.
Katja Hall, CBI chief policy adviser, said: "Regulation has an essential role to play in a thriving market economy, promoting competition and protecting consumers, but we know it can be a major barrier to growth.
"The Autumn Statement contained some really welcome proposals to improve the accessibility and accountability of the regulators that enforce many of the rules, but the facts speak for themselves.
"Small and medium-sized businesses are the engines of growth, but they're telling us they are drowning under the weight of extra regulation coming out of Whitehall, layered on top of outdated red tape which has not been repealed.
"We're calling on the Government to back up its words with action. We want to toughen up the law so there is a presumption that every piece of regulation has a sunset clause, so it expires after a set date unless it is actively renewed.
"We want the regulation minister to personally sign off each extra piece of regulation and business laws to be subject to greater scrutiny in parliament."
Hall added: "We want a culture shift in Whitehall, with greater transparency and accountability in how regulation is created, and more detailed analysis of what it will mean for businesses, with civil servants bringing in external expertise to fully inform thorough impact assessments."
Mike Cherry, policy chairman, Federation of Small Businesses, said: "Regulation has long been stifling business growth and small businesses have repeatedly said that the burden of regulation and the time it takes to comply with is just too much and could prevent them from taking on staff."