In 1704, Anglo-Dutch forces captured Gibraltar from Spain during the War of the Spanish Succession. The territory was ceded to Great Britain in perpetuity under the Treaty of Utrecht in 1713. It became an important base for the Royal Navy, particularly during the Napoleonic Wars and World War II, as it controlled the narrow entrance and exit to the Mediterranean Sea, the Strait of Gibraltar, which is only 14.3 km (8.9 mi) wide. This choke point remains strategically important, with half the world's seaborne trade passing through it. Gibraltar's economy is based largely on tourism, online gambling, financial services, and bunkering. With one of the world's lowest unemployment rates, the largest part of the labour force are resident in Spain or non-Gibraltarians, especially in the private sector.

The sovereignty of Gibraltar is a point of contention in Anglo-Spanish relations, as Spain asserts a claim to the territory. Gibraltarians overwhelmingly rejected proposals for Spanish sovereignty in a 1967 referendum, and for shared sovereignty in a 2002 referendum. Nevertheless, Gibraltar maintains close economic and cultural links with Spain, with many Gibraltarians speaking Spanish as well as a local dialect known as Llanito.

Under its current constitution, Gibraltar has almost complete internal self-governance through a parliament elected for a term of up to four years. The unicameral parliament presently consists of 17 elected members, and the Speaker who is not elected, but appointed by a resolution of the parliament. The government consists of 10 elected members. The head of state is the British monarch King Charles III, who is represented by the Governor of Gibraltar. The governor enacts day-to-day matters on the advice of the Gibraltar Parliament, but is responsible to the British government in respect of defence, foreign policy, internal security and general good governance. Judicial and other appointments are made on behalf of the monarch in consultation with the head of the elected government.

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