I'm not too sure about this, especially when going from larger to smaller, but is it possible that blocking the piece could be done is such a way that the garment comes out smaller than it would be right off the needles?
I'm a great fan of blocking knitted pieces since they present themselves so much more professionally that way. And I know that if I need to "nudge" a piece slightly larger that I can block it that way and it'll usually do the trick.
I would think the same thing goes with blocking smaller. I guess you'd lay out the garment and, without stretching it much, pin it down and let it dry. You could probably do this with the jacket sewn together but you might want to invest the time to take the pieces apart, block the pieces and then re-connect them.
There are lots of folks on here who can tell us if this will work and I'll be very interested to hear their comments.
Happy knitting and good luck!