For the d-dimensional incompressible Euler equation, the standard energy method gives local wellposedness for initial velocity in Sobolev space with regularity above some critical threshold. The borderline case was a folklore open problem. In this paper we consider the physical dimension d=2 and show that if we perturb any given smooth initial data in critical norm, then the corresponding solution can have infinite critical norm instantaneously at t>0. In a companion paper we settle the 3D and more general cases. The constructed solutions are unique and even infinitely-smooth (locally) in some cases. To prove these results we introduce a new strategy: large Lagrangian deformation induces critical norm inflation. As an application we also settle several closely related open problems.