In "King Richard II," which will be telecast at 8 tonight on Channel 26, William Shakespeare handles a British equivalent of the Watergate story: the first time in history that a living English monarch was deposed.

"For God's sake let us sit upon the ground," says Richard in one of the plays great speeches, "and tell sad stories of the death of kings." But death is a secondary issue. Richard's own death comes as a sort of epilogue to the action of the play, which is really about politics, law and economics.

Given such potentially dry material, Shakespeare naturally focuses on the intense human feelings implicit in it, and he lavishes upon it some of his finest poetry. John of Gaunt's "sceptred isle" speech, for example (which is to Englishmen what the Gettysburg Address is to Americans), turns out to be about economics, after all the compound subjects finally get to their verb.

As delivered by John Gielgud in the BBC production shown tonight, the speech reveals all the power latent in economics-and, of course, in Gielgud. John of Gaunt is a relatively small role, but until his death (in Act II, Scene I), Gielgud makes it as powerful as the young king-which he first played 50 years ago.

The title role-a very demanding one, with mercurial changes of mood and a growing depth in the later acts, is assigned to Derek Jacobi, who is best known for his title role in "I, Claudius" but has also appeared in such films as "Day of the Jackal" and "The Odessa File." His Richard is both believable and kingly, with a nicely calibrated sense of the difference between the public and the private personality-a fine, royal figure on ceremonial occasions (which abound in the very ceremonious play) but foppish among his friends, weak and indecisive when he is not supported by the strength of armies and pageantry, and utterly desolate after losing his throne.

His climactic moment-and the play's-is the deposition scene, where he sometimes verges on hysteria but pulls himself together to lay aside his kingship most regally: "With mine own hands I give away my crown, /With mine own tongue deny my sacred state./ With mine own breath release all duteous oaths."

This scene was considered so inflammatory that it was not publicly performed or included in the editions of the text published during Queen Elizabeth's lifetime-except once; on Feb. 7, 1601, when some followers of the Earl of Essex commissioned a special performance-the afternoon before his ill-fated uprising against the queen.

Elizabeth herself noted the parallel a few months later. "I am Richard II, know ye not that," she said to a confidant. But in this production, Derek Jacobi is Richard, with all his weaknesses and contradictions.

Other distinguished performances are given by Charles Gray as the tormented, vacillating Duke of York and by Jon Finch as Bolingbroke, who returns from exile with an armay, undermines Richard's power (never very impressive at best) and finally becomes King Henry IV-a role he will play twice more in the complete BBC cycle of Shakespeare's plays that will be telecast by public television over the next six years.

The production has small flaws but is generally good, respecting the ambiguity of Shakespeare's text and matching the fluidity of the film medium to the fluidity of the play-wright's mind.