A flag containing three other flags.
It is called the Union Flag because it symbolises the administrative union of the countries of the United Kingdom.
It is made up of the individual Flags of three of the Kingdom's countries all united under one Sovereign - the countries of 'England, of 'Scotland' and of 'Northern Ireland' (since 1921 only Northern Ireland has been part of the United Kingdom). As Wales was not a Kingdom but a Principality it could not be included on the flag.
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England is represented by the flag of St. George.
Scotland is represented by the flag of St. Andrew.
The first Union Flag (1606)
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On 1 January 1801, Ireland was united with Great Britain and it became necessary to have a new National Flag in which Ireland was represented. The cross St Patrick was combined with the Union Flag of St George and St Andrew, to create the Union Flag that has been flown ever since.
To summarize...
The formation of the Union Flag (Union Jack) came about as the result of the progressive merging of the inhabitants of the British Isles under one throne.
1603 - King James VI of Scotland inherited the English throne and became King James I of England. 1606 - the National Flags of Scotland and England were united for use at sea, thus making the first Union Flag
The first Union Flag (1606)1707 - during the reign of Queen Anne, the first Union Flag was by royal proclamation made the National flag of Great Britain, for use ashore and afloat.
1801 - Ireland was united with Great Britain and the present Union Flag was formed.
The Welsh dragon does not appear on the flag because when the first Union Flag was created in 1606, Wales was already united with England from the 13th century. This meant that Wales a Principality instead of a Kingdom and as such could not be included.
In 1536, under Henry VIII, the Act of Union joined England and Wales officially.