So my friends mom grew up in Gibraltar in the 1960's and there was always a fear that Franco would try and take it back for Spain. I think at times he blocked the Countries border with Spain. So my question is was did the UK and Spain ever come close to war after WW2, and if they didn't how likely would it have been to escalate? Would they a have sent a military force to liberate it like they did the Falklands?
Franco was definitely pro-Axis, both by general political inclination and in gratitude for German and Italian aid to the Nationalist cause in the Spanish Civil War.
Not long after the Fall of France, Franco offered to join the Axis but Hitler declined, apparently feeling that they'd pretty much won anyway.
Once the Battle of Britain had been fought, German high command became worried about British intervention against the Italians in Africa and Hitler met Franco in Hendaye to discuss Spain joining the Axis - however, Hitler didn't get on with the Generalissimo personally and by this time Franco was making some pretty big demands both in terms of German material assistance during the war (food, fuel, money, arms) and Spanish territorial acquisitions afterwards (chunks of Morocco, the French bits of Catalonia and the Basque country), and it never happened. Spain wasn't about to attack the British Empire off its own bat after a sapping Civil War, so nothing more happened.
Depends which historian you read as to whether you believe Franco actually thought closing Gibraltar was worth all that or whether as some argue that he knew he'd be rejected and it was a way of getting out of being involved while saving face.
The Spanish government did manage to provide some aid to the Axis war machine, both by allowing German and Italian submarines to refuel and resupply in Spanish ports, and by sending a volunteer division to fight on the Eastern Front.
Source: "The Battle for Spain" by Antony Beevor
The border was closed from June 1969 to February 1985, the opening of the border (as in complying with the Treaty of Rome) was the one requirement that the UK insisted on to not blackball post-Franco Spain's admission to the EEC.