Identity is an interesting thing. It's a fabrication, but one based on actual experience. For some, identity is a declaration of how they want the world to be. See for example those Muslims who identify themselves as primarily Muslim and overlook the huge differences within this category. Also see British. It's a declaration that Scottish islanders and residents of Croydon are one united people.
As well as ambition and intent, identity describes people's feelings of commonality. Who they feel culturally comfortable with. See above for examples.
Personally I have cultural ambitions that lead me to enthuse about our global commonality. While at the same time I'm suspicious of local macro commonality such as Britain, the German-speaking-people, Eastern European, etc.
I identify as English, not British. The Scots and Welsh are a little bit different. I'm a southerner too (whose family were northerners... Part of which makes me recognise my southerness).