What factors made the United Kingdom the first to industrialize? Was it simply the importance and benefit of its position in the global community for trade?
Several historians/economists hold several factors responsible. I know two works that discuss this in great depth:
Personally, I believe the following factors played a crucial role:
Wars: Britain's isolation from continental Europe meant that Britain was relatively more peaceful than the rest of the Europe. It was difficult to invade. In the 16th century, England had thwarted a Spanish naval invasion and brought attention to the need to have a strong navy. Later monarchs invested a lot in naval technology and better ships. Not only this navy became a strong deterrent to an invasion, it also went on to protect merchant interests at sea. By the late 18th century, when most European countries were being plundered (the Napoleonic wars), Britain emerged with a naval superiority and a large protected merchant vassal fleet.
Markets: British merchants also had a sizeable market (in form of their first colonies). With a small labour supply at home, there was a strong incentive to automate as much manual tasks as possible. This started with textiles but then later moved onto other sectors as well.
Legal framework foundation: England's legal system also played a tremendous role here. Various laws that formalised the patent process introduced strong incentives. Religious freedom that followed Elizabeth I's rule also encouraged scientific/engineering revolution. Many modern day laws that protect corporations (such as those on taxation, property, ownership etc.) were passed during the early 18th century in the English parliament. Overall, England (and later Britain) became a good place to do business. For a more detailed account of how British legal system played a part in the industrial revolution please read Julian Hoppit's paper.
Scientific Discoveries: This is more of a follow on from the three I mentioned above but with enough wealth in hands and laws to protect intellectual rights, English engineers and scholars went on to create the first machines that revolutionised industry for the first time. The textile mill, steam engine, locomotives, steam ships etc. are all examples of such scientific discoveries.
You have to bear in mind that all these factors (and several other small ones) were all needed together. Many European countries had a few of them and they followed the suite when they achieved/got the rest. Also, for many of them a slight difference in factors can be seen (for example, Germany's market was mainly domestic and towards the East --not its colonies).
England had already undergone the first industrial revolution by the time the steam engine was invented. Other European countries were quick to follow.
I'm going to take this a perhaps unexpected direction, Connections-style. Everything else I see in the other answers is IMHO just an effect (although RI Swamp Yankee comes close). What did England have that the rest of Europe didn't that ultimately caused it to become the first center of industrialization?
England, particularly the Scottish highlands, happens through a convergence of animal breeding and just the right (horrible) climate to produce the best and most wool in Europe.
Now initially the wool would be shipped to mills in Flanders to produce cloth. A large industry built up supplying all Europe with Flemish cloth using English wool. However, as the population of Europe (and thus demand for cloth) exploded after the end of the Black Death, and the Spanish Netherlands became the battleground of Europe, more and more of the milling started to be done at home England and Scottland instead.
With the market exploding, there was a trememdous pressure on producers to mill more cloth faster every single year. This meant the English mills kept getting bigger, and more efficient. Any innovation that one mill found which helped effenciency had to be adopted by the other mills too, or they couldn't compete and would go out of business. Eventually cotton from America and India started supplementing the wool, but it was still all being shipped to the large British mills. This processes then started spreading to anything else that could be similarly milled (eg: flour, steel).
The first steam engines were used for the mills. The first widespread use of coal was for the mills (the fact that England also had a lot of coal too certianly helped things along). Millions of people abandoned rural areas to work in the new mill towns. Railroads were initially invented to bring more coal to the mills. The first "programmed" devices were looms in the cloth mills. It was this transfomation of society William Blake was referring to when he wrote the line "dark Satanic mills" in Jerusalem.
But it all started because of the sheep.
The Dutch actually beat the British to it by almost a century - their problem was a lack of deepwater ports and domestic resources, so the British were able to overtake them in the 18th century.
Now, if you want to ask why the Dutch were the first to industrialize, I can recommend "The Baroque Cycle" - historical fiction by Neal Stephenson that covers England's entry into the industrial age. The Dutch were doing innovative things with finance and trade, fueled by religious fervor (the Puritains were very serious about idle hands doing the devil's work), a strong legal system and a permissive government.
One of the advantages of the Dutch system was patent protections for new inventions - among these the reciprocating crankshaft of Cornelis Corneliszoon which allowed the Dutch to build mechanized factories. They were able to import raw materials from all over the globe, and export finished products to same, including gin, paper, refined sugar, linseed oil, ceramic goods, and, of course, ships and rope.
For a more scholarly treatment of Dutch industrialization in the very early 17th century, here is a chapter on the topic from "Dutch in World Trade: 1585-1740" By Jonathan Irvine Israel
Without the United Kingdoms tolerance to views and opinions that elsewhere would have been considered heresy (like much of Catholic Europe and the Islamic and Muslim kingdoms found elsewhere) innovation, invention, science and original thought could not have happened.
It is specifically this tolerance to original thought that allowed inventors free reign to experiment and publish ideas without fear of proscription and persecution from religious zealots, as was happening in the Spanish Inquisition in Spain that allowed the Industrial Revolution to occur.
Without the Industrial Revolution, the United Kingdom would never have been the first to industrialise.
Since it wasn't brought up, I'll offer an alternative view that was only recently voiced in Science (see here): wheat and rice as main staple food shaped the culture and boundaries of the societies.
NB: this isn't about the United Kingdom in particular, but about the "Western world" as opposed to Asian empires of the time.
The question that came up was centering around why the Chinese weren't the first, for example. Their society was quite advanced and a lot of things were known to them before they were introduced to or discovered in Europe.
The conclusion seems to be that food shapes the culture and ultimately the mode of thinking. Throughout Asia community often counts more than in the Western world.
The causal relation isn't clear, but rice requires much more intensive care and cooperation while wheat is hassle free and requires little to no cooperation, even in a society before mechanization.
The arguments logical and they do not seem to be as partisan as Adam Smiths book "The Wealth of Nations" that was suggested in a comment.
Various factors, the major one being that the iron ore in England does not have phosphorus in it. I would identify two main factors:
(1) The largest integrated economy in the world. In 1850 England had the largest advanced, integrated economy in the world. Germany/Austria/Hungary had as good, or better technology, but was ruled by many different petty princes with complex trade and cooperation barriers that prevented the continent from acting as a unit. The US had a large economy, but not the global empire that England had, and also was not as technologically advanced as England.
(2) The real key to the industrial revolution was cheap steel. This is what makes everything else happen. The critical development was the Bessemer converter in 1856. Unfortunately for the Germans, the Bessemer process does not work on ores with a high phosphorus content, and all the German ores are of that type. This gave England a huge advantage and leg up on industrial development.
The UK was already a very wealthy nation at the time. They had established trade routes and colonies all over the world from the Americas to the Far East. Her deep water ports and inland canal systems made it easy to transport goods from inland and export them all over the world.
It was also teeming with great scientific minds. The Royal Society had a great influence in many fields of scientific study. It was a community that brought many great minds together that existed quite some time before the industrial revolution was in full swing. Amongst its many prestigious members was Isaac Newton.
James Watt, a member of the Royal Society invented the modern steam engine. Early steam engines such as ones based on the Newcomen design were very inefficient and had limited usage. It wasn't until the invention of the Watt Steam engine, that it became possible to use steam in manufacturing processes as well as in vehicles such as canal boats and locomotives.