By Jorge Liboreiro

For Ursula von der Leyen, the sky might not be the limit.

In a show of ambition and audacity, the president of the European Commission has proposed the largest budget ever seen in the bloc’s history: almost €2 trillion between 2028 and 2034.

“We are investing more in our capacity to respond and more in our independence,” she said in her long-awaited presentation.

The headline figure is bigger than any of the numbers that have been feverishly making the rounds in Brussels for the past weeks. It’s also somewhat deceptive: €2 trillion includes about €168 billion to start the repayments of the COVID-era debt, which can vary according to interest rates.

Still, it’s a tremendous amount of money that reflects von der Leyen’s grand vision and the powerful sense of urgency that has gripped the European Union. As the bloc attempts to navigate a seemingly never-ending string of challenges, coming from inside and outside, the budget can no longer be business as usual, she said. It must be revamped, rethought and remodeled to the “new era” we live in.

“The budget is larger, it is smarter, and it is sharper,” she told reporters.

It doesn’t take much to divine the inspiration behind the colossal budget.

Shortly after von der Leyen arrived in Brussels, a largely unknown figure from Berlin, she was faced with the COVID-19 pandemic and nationwide lockdowns that sent the European economy into a painful plunge. Suddenly, she had to design a history-making recovery fund, repair supply chains and negotiate vaccine contracts on behalf of the 27 member states.

If that wasn’t enough, she was then tasked with managing the consequences of Russia's full-scale invasion of Ukraine, the spike in energy prices, record-breaking inflation, unfair competition from China and a string of devastating natural disasters, all of which left her scrambling to find money and deliver the response that leaders were expecting from her executive.

The problem, she recounted, was that 90% of the budget lines were “fixed”, meaning they had been earmarked for a specific programme or purpose. This left her little room for manoeuvre, to the point that she had to ask for a mid-term review with top-ups for Ukraine, migration management and natural disasters.

“Each time, it was extremely difficult to react fast and with the financial firepower that was necessary,” she remembered. “Not everything should be decided once for seven years.”

Eager to avoid a repeat of this scramble, she has pitched a budget that slashes the number of programmes from 52 to 16, with a share of the money completely unallocated to allow the Commission and member states to shift money and respond faster to the changing circumstances.

On top of that, von der Leyen proposes a special mechanism of up to €400 billion in loans to deploy in case an “unknown crisis hits”. The tool will not be immediately created; rather, it will be an in-waiting reserve to be triggered when the need arises.

“It’s something we have as a possibility, but not to be used for normal times,” she warned.

But there’s more. Von der Leyen is determined to reduce the Commission’s long-standing dependency on the contributions from capitals, which represent the largest share of the common budget. She wants the executive to be more independent by expanding its ability to collect revenue.

Traditionally, Brussels has relied on two resources – customs duties and value-added tax (VAT) – to cover a portion of the common budget. Now, she envisions five more.

Two of them will be based on the bloc’s climate policies: the Emissions Trading System (ETS) and the Carbon Adjustment Mechanism (CBAM). The other three will consist of new taxes on electronic waste (e-waste), tobacco products and companies with an annual turnover above €100 million.

Altogether, it is estimated the old and new own resources will bring in €58.5 billion per year. This amount will be enough to cover the €24 billion in annual repayments of the COVID debt, which will otherwise have to be covered by sacrificing other programmes.

Sounds good? Not so fast. Own resources, particularly the new taxes, are set to be fiercely contested by leaders, who are naturally predisposed to resist any amendment that makes the Commission more powerful. The two years of negotiations will be bitter, harsh and, at times, ugly.

Money, after all, is the greatest leverage one can have in politics. For von der Leyen, that leverage is now worth €2 trillion.