Syriza has won the most seats in Greek election on January 25, potentially ending decades of two party rule by New Democracy and the Panhellenic Social Movement (Pasok). Firebrand politician Alexis Tsipras now looks very likely to become prime minister, the first from the radical left to win power in any EU country in years.

The Greek election result represents the first rumblings in 2015 of potential political and economic earthquakes on the European horizon. On the political front, the ballot highlights the growing strength of populist parties which was previewed in last May’s European Parliament elections.

Results then showed major gains across much of the 28-member European Union for anti-integration, Eurosceptic parties which span the ideological spectrum from the extreme-right National Front which won the ballot in France, to Syriza which came first in Greece. The poll result shows that such parties can translate that EU success into victory in major domestic elections too. And other populist groups are likely to secure growing support this year in countries ranging from Estonia (which goes to the polls on March 1); Finland (April 19); United Kingdom (May 7); Denmark (on or before September 19); Poland (probably in October); Portugal (October); and Spain (on or before December 19).

It is perhaps Spain which has the strongest parallels with Greece. The Spanish economy has suffered a major economic downturn that has fuelled the rise of anti-establishment, radical left party Podemos, only founded in 2014, which is currently neck and neck in the polls with the ruling right-of-centre People’s Party. Meanwhile, the long established Socialist Party is trailing in third place, but might yet win power in coalition with Podemos at the next election. The electoral appeal of rightist and leftist populist parties reflects a range of factors, not just discontent over the post-2008 economic downturn and subsequent austerity. Broader issues include disquiet with established political parties and systems, concern over immigration, and discontent with growing European integration.

Syriza has benefited from much of this political flux, and looks likely to bring an end to decades of two-party rule dominated by right-of-centre New Democracy and centre-left Pasok. Syriza is the Greek ‘Coalition of the Radical Left’, comprising a broad spectrum of socialists and communists, anti-fascists, environmentalists, anti-globalisation campaigners and human rights advocates. It only came together in 2012 as a single political group, rather than an alliance of multiple different parties.

Turning to the potential impending economic earthquake in Europe, Syriza’s electoral success re-opens prospects of a rupturing of the Eurozone with a Greek exit (Grexit). The possibility of this has grown, but is currently probably still less than 50 per cent.

Tsipiras insists he wants Greece to keep the euro, although he warned last week of forthcoming “major clashes” with international creditors to ease the country’s debt burden which is over a staggering 175 per cent of its GDP. Moreover, in the event Syriza ultimately fall short of an absolute majority in the Greek Parliament as a result of the election, it will try to run a minority government or form a coalition, possibly with the more centrist parties Pasok and/ or To Potami, which may lead to a more pragmatic government stance.

However, there is also possibility of coalition with the conservative, Independent Greeks party, which shares a strong anti-bailout position with Syriza, and could reinforce the latter’s instincts that the country’s economic “humiliation” must come to an end. However, these two parties differ on other issues like the closeness of the links between the state and the Orthodox Church, which may make a pact difficult.

While Grexit cannot therefore be dismissed, many market participants appear to be more sanguine today than compared to a few years ago. In part, this is because of the changed ownership of Greek public debt.

Today, more than 80 per cent of Greece’s public debt is owned by institutional investors, whereas private investors held the vast bulk of Greek bonds in 2011. This may mean further turmoil in Athens will not spread significant contagion through the Eurozone and, to date, there has been a declining correlation of spreads on Greek and other south European countries’ credit default swaps, the market proxy for contagion risk. Nonetheless, Grexit would still be highly unpredictable. Some, including The Economist magazine, have noted the potential parallels with 2008 when it was widely assumed that the international financial system was sufficiently resilient to manage collapse of a single major bank (Lehman Brothers).

The IMF has also asserted that it is not yet clear what the true contagion risk would be from Grexit. And, in coming weeks, sabre-rattling from a new Syriza-led government could heighten investor fears about the strength of populist and euroskeptic parties in other vulnerable countries, including Spain.

That Grexit is likely to have significant economic fallout for Europe is reflected by estimates that, even under the mildest of financial stress scenarios, there would potentially be a contraction in Eurozone GDP of at least 1.5 per cent. This is greater than the current contribution of the Greek economy.

Moreover, the fact that Eurozone membership would be shown to be reversible could change investor perceptions of risk. And, a deep Greek loan write-down would also undermine the capacity of the European Financial Stability Facility to borrow, or present it with higher borrowing costs.

Taken overall, Syriza’s success points to the prospect of other populist parties performing strongly in European elections in 2015, including Podemos in Spain. While negotiating rhetoric of the Syriza-led government will toughen with its creditors, eventual exit of the Eurozone is by no means a foregone conclusion.

Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics, and a former UK Government Special Adviser.