LONDON - Huge debt piles among the world's biggest economies are starting to unnerve financial markets again, as elections cloud the fiscal outlook.

French bonds took a beating after a surprise election and hefty spending plans caused alarm. U.S. debt dynamics are in focus ahead of a November presidential election.

A debt crisis is not the base case, but investors are alert to the risk of looser purse strings sparking market stress.

"Deficits are back in focus," said Guy Miller, chief market strategist at Zurich Insurance Group.

"There needs to be more attention placed on not just the debt, but how to generate a growth dynamic – particularly in Europe," he added.

Here's a look at five big developed economies on the worry list:

1/ FRANCE

A surprise election was a rude awakening to investors who had previously looked past France's creaking public finances. With a budget gap at 5.5% of output last year, France faces European Union disciplinary measures.

France's bond risk premium over Germany briefly surged last month to the highest since 2012's debt crisis as the far right pushed ahead in the election race.

A leftist alliance ultimately won and a hung parliament may limit its spending plans but could also hamper any action to strengthen France's finances.

France's national audit office chief said on Monday there was no room for manoeuvre on the budget and debt must be reduced.

Even before a new government, the EU expected debt at around 139% of output by 2034, from 111% currently. France's risk premium has eased, but remains relatively high.

"There's going to be a permanent fiscal premium embedded in the price," said David Arnaud, fund manager at Canada Life Asset Management.

2/ UNITED STATES

The U.S is not far behind. The Congressional Budget Office reckons public debt will rise from 97% to 122% of output by 2034 - more than twice the average since 1994.

Growing expectations that Donald Trump will win November's presidential election have lifted Treasury yields recently as investors have priced in the risk of larger budget deficits and higher inflation. Some investors reckon the worst outcome for bond markets would be a Trump presidency with a Republican-led House of Representatives and Senate.

That would mean "we can get another round of fiscal stimulus... from a starting point in which the deficit is 6% of GDP," said Legal & General Asset Management's head of macro strategy Chris Jeffery.

While U.S. Treasuries are buffered by their safe-haven status, the yield curve is near its widest since January, reflecting the pressure facing longer-term borrowing costs.

3/ ITALY

Investors have praised nationalist Prime Minister Giorgia Meloni as market friendly. Yet last year's 7.4% budget deficit was the highest in the EU. So Italy also faces EU disciplinary measures that will test market optimism.

Italian bonds have outperformed their peers. But the risk premium on Italy's bonds briefly hit a four-month high in June, as French bonds sold off, reflecting how quickly jitters can spread.

Rome aims to lower the deficit to 4.3% this year, but has a dismal track record recently for meeting fiscal goals.

Home renovation incentives costing over 200 billion euros since 2020 will put upward pressure on Italian debt for years. The EU executive projects debt rising to 168% of output by 2034 from 137% now.

"You're not getting rewarded for the risk that you're running in Italy," said Christian Kopf, head of fixed income and FX at Union Investment.

4/ UK

Britain has gone down the worry list since 2022, when unfunded tax cuts by the then-Conservative government routed government bonds and sterling, forcing central bank intervention to stabilise markets and a policy U-turn.

A new Labour government, which has pledged to grow the economy while keeping spending tight, faces challenges, with public debt near 100% of GDP.

It could surge to more than 300% of economic output by the 2070s, Britain's budget forecasters said last year, with an ageing society, climate change and geopolitical tensions posing big fiscal risks.

Stronger economic growth is key to stabilising debt, says S&P Global.

5/ JAPAN

Japan's public debt stands at more than twice its economy, by far the biggest among industrialised economies.

That's not an immediate worry, because the bulk of Japanese debt is domestically owned, meaning those investors are less likely to flee at the first signs of stress. Overseas investors hold just about 6.5% of the country's government bonds.

Fitch Ratings reckons price increases and higher interest rates could benefit Japan's credit profile by inflating debt away.

There are still some reasons for concern.

Japan faces more than a two-fold increase in annual interest payments on government debt to 24.8 trillion yen ($169 billion) over the next decade, government estimates suggest.

So any sudden jump in Japanese bond yields as monetary policy normalises is worth watching. At just over 1%, 10-year yields are near their highest since 2011.

(Reporting by Yoruk Bahceli in Amsterdam and Dhara Ranasinghe in London; additional reporting by Leika Kihara in Tokyo; Editing by Christina Fincher)