FILE PHOTO: Flags are pictured during the first working session of G-7 foreign ministers in Muenster, Germany, November 3, 2022. REUTERS/Wolfgang Rattay/Pool/File photo

By Joice Alves and Sara Rossi

LONDON (Reuters) -Some of the world's biggest economies are at the centre of a bond market storm as investor concern grows that governments are not doing enough to get uncomfortably high levels of debt down.

"Government debt levels are simply too high and not enough has been done to tackle them," said Zurich Insurance Group chief market strategist Guy Miller.

A debt crisis may not be the base case, but the alarm bells have started ringing.

Here's a look at who is on investors' watchlist.

1/ FRANCE

France has shot to the top of the worry list.

Opposition parties ousted centre-right Prime Minister Francois Bayrou this week over his unpopular plans for budget tightening. Political uncertainty means taming a debt pile running above 100% of GDP and a budget deficit nearly double European Union limits will be hard.

If growth slows or deficit reduction is relaxed, debt payments could top 100 billion euros ($117 billion) by 2029, from 59 billion euros last year, France's Cour des Comptes audit office has warned.

"It may take a bond market riot to force together a coalition to pass a budget," said Commonwealth Bank of Australia currency strategist Carol Kong.

Thirty-year bond yields have hit their highest since 2009, long-term borrowing costs are higher than Spain's, nearly the same as Italy's, and the risk of a sovereign ratings downgrade has increased.

2/ BRITAIN

A reshuffling of Prime Minister Keir Starmer's top team of advisers and an annual budget set for November has focused attention on Britain's ability to control its finances.

Long-dated borrowing costs this month surged to the highest since 1998 while sterling tumbled.

Economists say finance minister Rachel Reeves will have to raise taxes by at least 20 billion pounds ($27 billion) to cover a shortfall in revenue due to weak growth, high borrowing costs and U-turns on plans for spending reductions.

Britain has the highest borrowing costs and inflation in the Group of Seven advanced economies, making it a target for market angst.

For Nordea chief analyst Jan von Gerich, Britain was a bit less worrisome than the United States or France.

"It's easier to find political will in the UK to make changes," he said.

3/ UNITED STATES

The world's biggest economy has not escaped market attention.

Its debt pile is nearly $37 trillion. President Donald Trump's tax-cut and spending bill, signed into law on July 4, could add a further $3.3 trillion over the next decade, the non-partisan Congressional Budget Office estimates.

True, the deepest and most liquid capital markets in the world are a buffer but rising debt means investors are demanding more compensation to hold Treasuries.

Signs of weak demand at recent auctions are a concern.

4/ JAPAN

Japan's lofty debt, one of the highest globally, is no secret.

What has changed is that the prospect of higher rates as inflation returns has pushed up borrowing costs, bringing high debt into sharp focus as the Bank of Japan reduces bond purchases.

Demand at recent auctions has been weak, adding to market pain.

Political uncertainty following Prime Minister Shigeru Ishiba's resignation has also helped push 30-year yields to record highs as speculation increases that his successor will spend more.

5/ GERMANY

Debt sustainability is not an immediate worry for Germany. It has the lowest debt-to-GDP ratio in the G7 and can spend more to boost economic growth.

However, markets are paying attention because massive stimulus means Germany is borrowing more via bond sales. Its 30-year yields are at the highest since 2011.

Lofty infrastructure and defence investments just confirmed in the 2025 budget bring the spending plan to 591 billion euros, including investments from the infrastructure fund and 100-billion-euro special fund for defence.

"It's almost a good reason why it's increasing supply," said Rabobank senior rates strategist Lyn Graham-Taylor.

(Reporting by Joice Alves and Sara Rossi; Editing by Dhara Ranasinghe and Emelia Sithole-Matarise)