* UK industrial output slumps at fastest pace in six years
* Q3 GDP could be revised down
* Home sales at record low, retail sales down
* BoE's Sentance says recession to match worst since 1945
(Adds comment from BoE's Sentance, M&S discounts)
By Matt Falloon and Sumeet Desai
LONDON, Dec 9 (Reuters) - British factory output shrank sharply in October, property sales are at a record low and the Christmas season is failing to ignite retail sales as evidence grows that Britain is entering a long and painful recession.
Sterling fell as gloomy surveys on Tuesday encouraged investors to bet the Bank of England (BoE) would have to slash interest rates further -- following 3 percentage points of cuts since the start of October to 2 percent.
BoE policymaker Andrew Sentance said recent survey data meant he now expected the recession to be as deep as previous downturns in the mid-1970s, early 80s and early 90s despite a significant easing of monetary policy by the central bank.
Previously, in its November Inflation Report, the BoE had forecast a recession that was slightly less deep than in the three major post-1945 British downturns.
"The 150 basis point (interest rate) cut in November changed the goalposts of perceptions of the measures the Monetary Policy Council would take," he said, adding it would take time for rate cuts to work.
The Office for National Statistics said industrial output fell 1.7 percent on the month, more than three times the rate predicted by analysts and the biggest fall since January 2003.
That took output 5.2 percent lower than a year ago, the steepest drop since April 1991.
The ONS also revised down output in previous months. Other things being equal, that would mean gross domestic product (GDP) contracted 0.6 percent in the third quarter instead of the 0.5 percent fall initially reported, it said.
Manufacturing output fell much faster than expected -- 1.4 percent on the month -- and for the eighth month running. This was the biggest drop since March 2005 and marked the longest stretch of declines since 1980.
Capital Economics economist Paul Dales said: "These figures suggest that the recession is deepening across the economy and that GDP may ultimately fall by something like two percent next year. Clearly, the (BoE's) Monetary Policy Committee has more work to do."
There has been little sign so far that a weaker pound is helping to boost demand for British goods abroad, as policymakers had hoped. The goods trade deficit with the rest of the world widened slightly to 7.75 billion pounds in October.
PROPERTY, RETAIL SLUMPS
The Royal Institution of Chartered Surveyors said the extent of house price falls eased slightly in November but home sales hit their lowest level since the RICS survey began in 1978 -- at an average of just 10.6 per surveyor and 55 percent down on a year ago.
Government data showed house prices fell 2.5 percent in October alone.
Banks have remained reluctant to lend to would-be homebuyers because of the credit crunch, despite support and increasing pressure from the authorities.
"Prices are set to fall markedly further over the coming months," said Howard Archer, an economist at Global Insight. "The fundamentals for the housing market remain largely unfavourable."
Heavy discounting and the proximity of Christmas did little to revive consumer spending last month either.
Like-for-like retail sales fell 2.6 percent on the year in November, the biggest decline for more than three years, according to the British Retail Consortium.
"Retailers will be hoping that customers have been putting off Christmas shopping -- not cancelling it," said BRC director general Stephen Robertson.
Retailers Marks and Spencer and Debenhams both said on Tuesday they would offer short-term price cuts again this week, to give another boost to faltering Christams sales.
The head of Britain's biggest credit card provider Barclaycard, Antony Jenkins, told Reuters he expected Britons to spend "quite a lot less" on cards next year because of waning consumer confidence and worries about the recession.. (Editing by Stephen Nisbet)