This report explores the economic benefits of metaverse technologies for the European economy and makes policy recommendations to support innovations towards developing the metaverse in Europe. The report surveys existing literature and draws on interviews with users and firms in various industrial sectors, along with offering current successful use cases. The report considers weaknesses and strengths to metaverse innovation and deployment, examining the hardware, standards, platforms currently used or in development, and EU-specific advantages, such as the EU Chip Act. It also looks at challenges faced around improving commercial incentives, promoting public adoption, and ensuring competencies and skills to develop in this area. The report calls for understanding values-based and human-rights dimensions, including sustainability, safety, health, equity and diversity. The paper concludes by making the case for long-term funding for innovation in this area, including supporting talent needed for metaverse development, industry growth and commercialisation, and an open ecosystem that benefits the public.