WHATEVER the outcome of the parliamentary election yesterday and the June 1st round, France's privatisation programme is heading for a rough patch.

While the Socialist opposition has told voters it will not continue with privatisations, it may be forced to sell off assets to pay for urgently needed injections of capital into other state owned firms, economists say.

Socialist Party leader Mr Lionel Jospin this week softened his stance on the largest of these sales - that of a stake in telecommunications monopoly France Telecom, saying he would first consult the company's staff. The party had previously said it opposed the sale.

A centre right government wants to continue the privatisation programme, with Prime Minister Mr Alain Juppe saying Credit Lyonnais bank and Air France could be sold this year.

But the easier to sell companies will have gone after the scheduled sale of a minority stake in France Telecom in June and a 58 per cent stake in defence electronics group Thomson CSF in the summer.

Further state sales also risk hitting increasing opposition from lab our unions and large sections of the public that support state companies.

A speeded up privatisation programme is unlikely to have an effect on France's bid to meet the European single currency targets that require a cut in the budget deficit to no more than three percent of GDP this year because sale revenues cannot be used to cut the deficit.

The revenues do help to cut the national debt but France is already well placed to meet the debt criterion in the single currency's guiding Maastricht treaty of no more debt than 60 per cent of GDP.

Privatisation revenues can, however, be used to cover expenses such as a capital boost to other state companies which could otherwise drain the budget and weigh on debt.