Populist parties: Kryptonite for Europe's leaders?

Elections in Greece this weekend could prove a test bed for anti-establishment, populist parties throughout Europe which continue to make their plague mainstream parties in the opinion polls, general elections and on the streets.

If Greek opinion polls are anything to go by, the Sunday's snap election could be a nasty shock for Europe as the anti-establishment, anti-bailout party Syriza looks poised to win.

Apart from concerns that Syriza would try to renegotiate Greece's bailout terms with international lenders, reverse austerity measures and seek debt forgiveness – reasons enough to destabilize markets within the euro zone's fragile, inter-connected economy -- Syriza could embolden other anti-establishment parties challenging the mainstream political elite and their policies.

Read MoreGreece in 'critical' situation as Syriza leads polls

Alexis Tsipras, leader of Syriza
Louisa Gouliamaki | AFP | Getty Images
Alexis Tsipras, leader of Syriza

Among those that could stand to gain the most is Spain's anti-establishment party "Podemos" (We Can). Despite being set up only one year ago, Podemos is leading opinion polls ahead of Prime Minister Mariano Rajoy's People's Party. Crucially, a general elections are due in Spain later this year -- giving Podemos a real shot at power.

"The rise of Syriza to power will represent an important test for the ability of an anti-establishment party to secure a better deal from Greece's international creditors that will be closely watched by similar political movements, like Podemos," Wolfango Piccoli, managing director of risk consultancy Teneo Intelligence told CNBC.

Anti-establishment movements such as the U.K. Independence Party (UKIP) and the Alternative for Germany (AfD) have spread throughout Europe over the last few years, accompanying a period of economic stress and unpopular austerity programs that have led voters to seek an alternative to the old political elite.

"Behind the success of anti-establishment parties across Europe these days is the economic vulnerability in a growing subset of national electorates. From Syriza to UKIP, populist forces try to cash in on this insider-outsider politics, but each in their own national contexts," Piccoli added.

Anti-establishment momentum

The growing momentum behind both parties such as UKIP and grassroots movements like Pegida, which has led thousands to take to the streets across Germany to protest against Islam, highlights how we could see a range of anti establishment populist parties grow in 2015 and beyond, according to one analyst.

"I think we'll see many of these anti-establishment parties continuing to gain support but it's important not to lump them all together," Pawel Swidlicki, policy analyst at think tank Open Europe, told CNBC.

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"A lot of them are country specific – for example, UKIP opposes immigration from within the European Union but many anti-immigration parties in the EU are more concerned about immigration from outside the EU."

Although the content of their policies varied, such parties were a manifestation of European leaders being out of touch with many voters and their concerns, Swidlicki believed.

"In Mediterranean countries like Italy and Spain, it's not just the economic situation that voters are fed up with, it's a deep-rooted dissatisfaction with the ruling political class," he said.

He said that more could be done at a European level-including devolving some powers back from the European Union to national governments on matters such as deciding who can access the welfare state, while the EU focuses more on promoting the region.

Market volatility

There are concerns that a resurgent nationalist sentiment in 2015 could cause an increase in politics-driven market volatility and pose more trouble for the fragile euro zone – an unwelcome event with especially with general elections due to be held within the next 12 months or so in not only Greece but also Estonia, Finland, Portugal and Spain.

"In the euro zone, populist parties are attracting increasing support (as Greece and Spain both confirm), posing fresh challenges to policymakers as the European Central Bank looks to sustain stability," Alastair Newton, senior political analyst at Nomura, said in a recent report.

Newton believed that nationalism in Russia and the rise of parties like the AfD in Germany, Podemos in Spain and the National Front in France was a threat to the old political guard such as German Chancellor Angela Merkel.

"The rise of the anti-euro Alternative für Deutschland (AfD) offers German voters what looks like an increasingly electorally credible conservative alternative to Merkel's (governing conservative alliance) CDU/CSU," he said.

As for the Greek elections, it wasn't a given that Syriza could win a majority in the vote, making a coalition government more likely – although it could take until mid-February before any such governing alliance was agreed, Newton said. "The history of the euro zone crisis suggests that there will ultimately be a 'messy compromise'," he said.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt.