The French state had been hoping to sell between 6% to 8% of France Telecom in order to raise 3.5bn euros ($4.30bn) to 4.53bn euros ($5.56bn) for the state coffers. However, demand for the stock has been poor, and it has only been able to sell a little over 6%, which raised just 3.4bn euros ($4.19bn).

The country’s finance minister, Thierry Breton, is the former CEO of France Telecom, and was behind the sale of 152 million shares in the carrier, which were sold at the bottom-end of the range. It is estimated that the average price paid had been 22.37 euros ($27.57) per share, beneath the range of 22.50 euros ($27.62) to 22.85 euros ($28.05) in which they were expected to trade.

Breton has also had to abandon plans to dispose of an extra 46 million shares that had been set aside in case of strong demand.

Unfortunately, demand has been so weak for the shares that it seems that the banks underwriting the offer have been left holding an unspecified number of shares that they would have to sell later in a co-ordinated manner, according to a unnamed source quoted in the Financial Times

France is struggling on three fronts at the moment. Firstly is the political fallout following the rejection a week ago of the planned European constitution.

Secondly is the parlous state of France’s public finances at the moment. France has broken the euro zone’s budget deficit limit of 3% of Gross Domestic Product (GDP) for three straight years in a row. Its budget deficit for the first four months of this year is 42.25bn euros ($52.06bn), up 6.7% from the same point in 2004.

Thirdly, and most importantly, the country is struggling to cope with spiraling unemployment, with unemployment levels sitting at a five-year high. France has an estimated 10.2% of the workforce without a job, in a country with a population of 60.6 million people.

The new centre-right government has made tackling unemployment its top priority. Indeed, it has given itself 100 days to make a significant impact on unemployment, but it has limited scope for maneuver due to the weak state finances.

The share sales now leaves the French government will a 34.9% state in the Paris, France-based carrier, which is expected to outline it future growth strategy later this month.

Shares in France Telecom were up 1.04% to $28.12 (22.78 euros) on the New York Stock Exchange at 4.50pm BST on Tuesday.