The UK could save over £50 billion in health expenditure over the next 17 years if it adopted EU proposals on chemical regulation, claims a leading environmental group.

A report, commissioned by WWF-UK, says the financial gains from reducing the impact of chemicals on people's health would exceed the estimated £14.4 billion cost to industry of implementing a new testing regime.

Under the proposed REACH (Registration, Evaluation and Authorisation of Chemicals) legislation some 30,000 substances would have to be registered with a new EU chemicals agency. Chemicals which were approved years ago would be subject to more modern and stringent testing and those that did not pass the tests would be banned.

Report authors, University College London economists Professor David Pearce and Phoebe Koundouri, say that - even without taking into account environmental gains - the true benefits for Europe in terms of better health and increased productivity could outweigh costs by more than 10 times. Based on World Bank estimates that between 0.6 and 2.5 per cent of diseases are chemically induced, the report's authors calculated that the proposed EU regulations would reduce exposure by 10 per cent.

The chemicals that WWF-UK singled out for most concern are those that "persist and bioaccumulate" in the body, and "hormone mimicking" chemicals (endocrine disrupting) that can hijack the hormonal system. Many of these chemicals, it says, are found in every day household items, such as sofas and TVs.

The pressure group says that a handful of these "widespread and dangerous" chemicals are responsible for rising rates of some cancers, metabolic disorders (such as diabetes) birth defects and may damage children's immune systems.

Chemicals account for 28 per cent of the EU's positive trade balance in manufactured goods. But companies face increasing competition from low-cost manufacturers in Asia and the Middle East - and the proposals have drawn sharp criticism from industry bodies.

The director general of the Chemical Industry Association, Judith Hackitt said: "The European Commission must re-think REACH from the bottom-up. We have always supported the political aims of the EU Chemicals Policy and acknowledged that the existing legislation needs to be replaced because it is ineffective. REACH, as currently drafted, will be hugely damaging to European manufacturing industry - and won't address what it seeks to achieve."

The US, which exports about €7 billion of chemicals to the EU each year, has also condemned the proposals.