The Second World War, like previous wars, was good for the economy of Juteopolis. In the short run, strategic concerns about sustaining domestic supplies of jute products brought the imposition of a state-sponsored Jute Control, which not only took over trading in raw jute but also restricted trade in manufactured products, allowing Indian goods to be sold in Britain only at prices with which Dundee could compete. During the war itself the operation of this Control was affected by the shortage of shipping space, which led to cuts in raw material imports, and by the concentration of the industry into fewer units in order to free labour and production capacity for war uses. As a result, imports of jute goods from India actually increased in the middle years of the war. Allied to industrial concentration, employment in the industry in Dundee halved during the war, but unemployment in the city more or less disappeared, reflecting the overall strength of the demand for labour.

In 1948 the Labour government's Working Party on the industry advocated modernisation of the industry to be combined with ‘protection against low-priced Indian imports’. Overt protection was immediately and publicly rejected by Harold Wilson, the President of the Board of Trade, as a breach of the trade agreement with India. But this was a general statement of the issues facing the government, and did not presage an immediate end to the existing limits on jute imports. Events in India in the late 1940s added to concerns about reliance on that source, with the Partition that accompanied independence destabilising the industry, with the main jute-growing areas in East Bengal forming part of Pakistan, whilst the manufacturing areas of West Bengal were in India.

In the longer run the fate of the industry in Britain was profoundly shaped by the new social settlement brought about by the war, in which, for the first time, governments committed themselves to give high priority to achieving ‘high and stable’ levels of employment. For postwar Dundee this new dispensation meant two major policy shifts. First, Jute Control, despite Wilson's statement, and whatever the original motives for setting it up, was kept in place for employment reasons. Secondly, regional unemployment was addressed seriously for the first time by substantial subsidies to investors in areas deemed vulnerable to job shortages, such as Tayside.