LONDON, Dec 22 Reuters Britain39;s economy might now be in a recession according to data which showed output shrank in the JulytoSeptember period, shortly after finance minister Jeremy Hunt suggested the Bank of England might cut interest rates to help boost growth.

Gross domestic product contracted by 0.1 in the third quarter, the Office for National Statistics said on Friday.

It had previously estimated that the economy showed no change compared with the previous three months and economists polled by Reuters had mostly expected another unchanged reading.

The ONS also said economic output in the second quarter was now estimated to have shown no growth, a downwards revision from a previous estimate of 0.2 growth.

However, separate data showed retail sales in November jumped by much more than expected, increasing by 1.3 from October, boosted by discount sales.

Sterling rose against the dollar and the euro after the data releases.

Finance minister Hunt, whose Conservative Party is lagging far behind the opposition Labour Party in opinion polls ahead of an expected election next year, said the outlook for the economy was not as bad as the updated official figures suggested.

The mediumterm outlook for the UK economy is far more optimistic than these numbers suggest, he said in a statement.

Separately, in an interview with the Financial Times published late on Thursday, Hunt took the rare step of commenting on the BoE39;s interest rate decisions.

There39;s a…