This report presents a rationale for a European Research Area that has a clear purpose which is meaningful to Europe’s citizens and political leaders and relevant to its key actors. While there is a pressing need to improve the effectiveness of the public research system, the ultimate justification of the resources and commitment needed to achieve this lies in increasing the value of the contribution that public and private sector research makes, and is seen to make, to Europe’s economic, social and environmental goals. The central means to achieve this is to engage the research system in Europe’s response to a series of Grand Challenges which depend upon research but which also involve actions to ensure innovation and the development of markets and/or public service environments. Challenges may be rooted in economic, social or scientific goals but share a need to demonstrate their relevance at the European level, their feasibility in terms of Europe’s capability to engage with them, and a clear research dimension such that they gain the commitment of the research community and pull-through the necessary improvements in its efficiency and effectiveness.