The pace of decline in parts of industry has eased, but most firms want a Brexit deal to be agreed as the UK’s exit from the EU nears, according to a new report.

The CBI said a survey of 648 companies showed that only 4% would prefer no deal on trade to be reached in the coming months.

Half of respondents said the impact of dealing with Covid-19 has negatively affected preparations for Brexit.

The study showed that private sector activity fell in the quarter to September, but at a slower pace.

Dame Carolyn Fairbairn, CBI director general, said: “Next week Brexit talks enter the eleventh hour. Now must be the time for political leadership and the spirit of compromise to shine through on both sides. A deal can and must be made.

“Businesses face a hat-trick of unprecedented challenges – rebuilding from the first wave of Covid-19, dealing with the resurgence of the virus and preparing for significant changes to the UK’s trading relationship with the EU.

Next week Brexit talks enter the eleventh hour. Now must be the time for political leadership and the spirit of compromise to shine through on both sides

“More than three-quarters of businesses want to see a deal that will support people’s jobs and livelihoods.

“For the whole continent, the pandemic has diminished firms’ ability to prepare for an abrupt interruption of restrictions on trade and movement between the UK and the EU.

“A good deal will provide the strongest possible foundation as countries build back from the pandemic. It would keep UK firms competitive by minimising red tape and extra costs, freeing much-needed time and resource to overcome the difficult times ahead.”

The fall in private sector activity is expected to ease again over the next three months, said the CBI.

CBI economist Alpesh Paleja added: “The pace of decline in private sector activity has continued to slow this month, with many businesses having sprung back into operation.

“Prioritising bringing infections down is the right move and the Chancellor’s new package of support will go a long way towards helping businesses and households through winter.

“But these are challenging times and we must still keep a close eye on those sectors that will remain under severe pressure in the coming months.”