The peninsular of Gibraltar on August 8, 2013 in Gibraltar. David Cameron has spoken with his Spanish counterpart, Mariano Rajoy, and Mr Rajoy has offered to 'reduce measures' at the Gibraltar border. - 

A spat between Britain and Spain over Gibraltar is escalating. Situated on the southernmost tip of the Spanish mainland, and covering two and a half square miles, Gibraltar -- or “The Rock” as it’s known -- is one of the U.K.’s last remaining colonies. Recently, Spain imposed extra border checks, causing long delays for people trying to get in or out of the British territory, and now the British government is threatening legal action.

Gibraltar triggered the spat after it created an artificial reef in disputed waters, hindering Spanish fishermen. But the row goes much deeper than fishing. Many Spaniards regard the presence of this foreign colony on the edge of their mainland as a national affront and almost since Spain ceded it to Britain by treaty in the early 18th century, successive Spanish governments have lobbied hard for its return.

But there’s no doubt where the loyalties of the 30,000 people living in Gibraltar lie.

In the last referendum, in 2002, 99 percent of them voted to stay British.

The Spanish government is now threatening to charge a $65 levy on anyone crossing the border and to close its airspace to any planes seeking to land in the territory.

Spain says it also plans to raise the issue of this 300 year colonial relic at the United Nations and may form an alliance with Argentina which has been campaigning for the return of another British colony in the south Atlantic, the Falkland Islands.

But British politicians say that Spanish sabre-rattling will not change the issue of Britain’s sovereignty over the Rock. "It’s a gross miscalculation to believe that either the people of Gibraltar or indeed the British government are likely to succumb to the sort of pressure which is proposed," claims Ming Campbell, a former leader of Britain’s Liberal-Democrat party.