However, some German lawmakers fear that any concessions granted to Syriza in the wake of an electoral victory could set a precedent for left-wingers in Spain and Portugal. The centre-right governments of both Iberian countries, which have implemented painful austerity programmes in exchange for EU loans, face difficult elections later this year.According to Janis Emmanouilidis, director of studies at the European Policy Centre, anti-austerity parties across Europe, such as Podemos in Spain, will claim a Syriza victory in Greece as their own. “But that is not the end of the story, since [their fate also] depends on how things develop in Greece after the elections,” he said. Currency and stock markets have been volatile in the face of renewed tension over concern that the radical left might win an election in Greece. There are echoes of the crisis that gripped the eurozone in 2012. A share index of the currency’s 50 largest companies has fallen by around 5% since 29 December, and Greek stocks have fallen by a quarter in the last month. Germany’s borrowing costs have fallen to new lows as investors seek a safe haven.If the euro’s slide into deflation were to continue, with consumers postponing purchases in the hope that prices will fall, shares would fall further. Clemente de Lucia, a senior economist at BNP Paribas, says the euro’s deflationary spiral should be avoided at “almost all cost”. The ECB is now under increasing pressure to kick-start a campaign of quantitative easing, in which it would buy up sovereign bonds and print money.“This is a very serious matter and cause for decisive action by the ECB,” said Olli Rehn, a Finnish liberal MEP who was previously a European commissioner for economic and monetary affairs. “But alone [quantitative easing] is not enough. We need in parallel to work towards reforms in France and Italy and greater public investment in Germany,” he told European Voice.The currency’s decline is also a symptom of markets losing faith in the ability of the eurozone’s political classes to find a way out of the crisis. Markets fell sharply in the wake of the announcement on 27 December of snap elections in Greece and were further spooked by media reports that German Chancellor Angela Merkel could envisage Greece leaving the eurozone if the radical left Syriza party were to win the elections.The report was seen as German interference in Greece’s election campaign and was described by Rehn as “political shadow-boxing” on the part of Merkel’s government, which is a coalition of centre-right and centre-left. Others fear that a hard-line approach on the part of both Germany and the EU may be helping Syriza, which is now leading in the polls.Investors are now expecting deep-seated political divisions over the currency to spill over into the ECB’s governing council. It met yesterday and will meet again on 22 January, and its support is required for any move by Mario Draghi, the ECB president, towards quantitative easing. The eurozone is on the cusp of a fresh political and economic crisis, with deflation, jittery financial markets, and renewed fears about Greece opening up deep divisions among EU member states.The euro yesterday (7 January) fell to its lowest level against the dollar since November 2005, after Eurostat had published estimates suggesting that the collapse of world oil prices had nudged the eurozone into deflation in December.The last time the eurozone registered a negative inflation rate was in 2009, as Europe’s economy groaned under the weight of the global financial crisis. A programme of buying up bonds to revive the economy and to counter deflation is strongly opposed by Germany’s influential central bank chief, Jens Weidmann. The ECB’s mandate instructs it to target inflation at “close to but below 2%”.Yet while inflation has stagnated around 0.5% since mid-2014, Draghi’s attempts to take unorthodox action have been resisted by the German government and Bundesbank.Germany has also marshalled opposition at the European level to the possibility of forgiving some of Greece’s debt, a key election promise of Syriza, or allowing a newly installed Greek government to backtrack on promised reforms.Michael Fuchs, a senior centre-right German MP, said that Greece would have to leave the euro if it reversed its reforms and he claimed that Merkel agreed with him.Meanwhile, Germany’s tough stance on the Greek election has sparked concern in the EU, with European Parliament President Martin Schulz saying that “irresponsible speculation” about Greece leaving the euro was “unhelpful”.French liberal MEP Sylvie Goulard told European Voice that it is “not our business” who the Greek people elect. “Grexit [a Greek exit from the eurozone] is not on the agenda, the treaties do not foresee it and no one should play with this,” Goulard said.