More than half (55%) believed any deal should align tariffs with the EU to ensure frictionless trade – compared to 36% that favoured complete differentiation.
The IoD’s survey of more than 1,400 business leaders found that the majority preferred a softer approach to Brexit.
However, more than a quarter (27%) supported the UK diverging from single market rules for goods and 30% supported this for services.
In a previous survey in January, 66% of respondents said that the country should remain in the single market, compared to 30% who believed it should leave.
Among finance and insurance leaders 61% supported aligning with the EU on services and 52% took the same stance on aligning on goods, compared to 28% and 26% respectively supporting divergence.
It was closer regarding tariffs, with 52% favouring alignment compared to 36% supporting divergence.
“While our members may be split on the question of another referendum, the preference for alignment to secure continued [single market] access after Brexit is clearer to see,” said interim director-general of the IoD, Edwin Morgan.
He said that MPs claiming to prioritise economic success need to take into account the views of businesses to help better understand the affects of any changes to the UK’s relationship with the EU.
“Depending on what happens in parliament this week, the government must make clear exactly how they intend to use an extension period to secure a smooth Brexit, and set us on the path towards a productive partnership with the EU,” Morgan added.
Later today MPs will hold a debate and vote on a series of Brexit alternatives. It is currently unclear if prime minister Theresa May’s deal will be voted on for a third time this week with speculation over her immediate future growing.