So, the law is actually more specific [1] than just three inches - it's obviously been written with the intent of permitting traditional swiss army knives, while banning essentially everything else. (Including leatherman tools due to their locking blades - and most kitchen knives, which don't fold)

I suspect someone measured their boyhood swiss army knife blade, determined that it was about 2.5 inches, and rounded up to the next whole number.

[1] https://www.gov.uk/buying-carrying-knives