BARROW-IN-FURNESS, England—Europe’s defense boom promised to revive struggling towns across the continent. Locals hoped a fresh injection of money would help rejuvenate communities that have withered for decades.
Instead, it is sparking division and resentment.
In Barrow-in-Furness, an impoverished shipbuilding town in northwestern England, a multibillion-dollar contract to build nuclear submarines has highlighted inequality and pulled workers from other professions.
Residents of Bergerac, a cobblestoned French town famous for its wines, complain that all they have received from a revamped explosives factory are empty promises and drones in their skies.
Such tensions across Europe are creating headwinds for politicians trying to convince voters that they must invest even more in defense to counter Russia and China, often at the expense of social spending.
When the North Atlantic Treaty Organization meets for its summit next month in Turkey, a central theme will be that military spending can boost the economy with jobs and new technologies.
In a sign of the test facing some Western nations, U.K. Defense Secretary John Healey resigned this past week in protest of what he saw as insufficient military funding proposed by Prime Minister Keir Starmer.
And as Barrow and Bergerac show, the benefits of arms spending can take years to materialize and often miss the people most in need of new opportunities.
Boom and bust with subs
The fortunes of Barrow have for over a century been tied to the fate of its shipyard. A hotel in town displays paintings of the rooftops with the shipyard glowing golden in the background.
When military orders dried up at the end of the Cold War, this town of some 67,000 people became one of Britain’s most deprived areas. Now, the shipyard is bustling again.
The U.K. government awarded a $5.4 billion contract to the British defense company BAE Systems to build up to 12 AUKUS-Class nuclear-powered attack submarines in Barrow, as part of a 2021 agreement with the U.S. and Australia.
The order added around 5,000 jobs to BAE’s workforce, which grew in recent years to build Dreadnought-class nuclear ballistic missile submarines and seven Astute-class submarines for the Royal Navy. BAE now employs 14,000 people in Barrow.
Starmer has called Barrow “a blueprint for what defense spending can do.” King Charles III conferred royal status on the Port of Barrow for its contribution to national defense.
But the salaries and benefits offered by BAE draw workers from other professions, leaving the town bereft of mechanics, driving instructors and nurses. On a recent evening in a local pub, two builders asked other patrons for recommendations for tradesmen and were told they had to wait several weeks.
“They have all gone to the yard,” replied a local restaurant manager. “We have weapons of mass destruction, but no plasterers.”
The sudden influx of money and workers has sent real-estate prices soaring. Some housing has been converted into rental properties shared between several households.
“It’s making the town, and it’s breaking the town,” David Richards, the pub’s bartender, said about the boom.
Benefits to the broader population will come, according to researchers who study the issue.
“The sector tends to require skilled workers that get paid quite well, and therefore the multiplier effect is good,” said Trevor Taylor, director of the program on defense, industry and society at the Royal United Services Institute, a think tank in London. “That resonates through the community.”
Barrow enjoyed a golden age in the late 19th century, when it was home to the largest iron and steel works in the world. The shipyard produced Britain’s first submarine in 1901.
Over time, the town declined. Its iron works closed in 1963. The steel works followed 20 years later. The end of the Cold War cost 10,000 jobs at the shipyard.
Parts of Barrow are among the most health-deprived areas in the U.K., according to the Cumbria Community Foundation, a charity. Drive from Broughton, 13 miles away, to central Barrow, and the life expectancy for boys drops 12 years, to 72.
“It’s a town of haves and have-nots,” said Michelle Scrogham, the town’s lawmaker in Parliament. “There’s two types of people in Barrow: Those who look forward to Christmas, and those who very much do not.”
The modern shipyard stands in contrast to the dilapidated 19th-century terrace housing outside its gates, which throw open at lunch time, spilling hundreds of well-paid shipyard workers in yellow high-visibility gear out into the streets to peruse supermarket aisles for meals.
To cushion against a future cutback in defense spending, the U.K. government has allocated the equivalent of about $268 million to Team Barrow, a private-public partnership with BAE, to regenerate Barrow and diversify its economy.
“We cannot exist in isolation,” said Janet Garner, BAE’s future workforce director. “People don’t move to an area just for one job. They move to an area because it’s an attractive place that offers opportunities.”
Many say the funding is insufficient. In addition to modern affordable housing, Barrow needs movie theaters, better supermarkets and retail, said Mayor Kay Hyland. A much-loved cultural center is slated for demolition owing to asbestos.
“In my youth, the town was absolutely buzzing, but now it’s dead,” Hyland said. “We’re not all about work. We want to do things in our leisure time as well.”
Drones in wine country
Some towns have been positively transformed by military spending. Aerospace and defense manufacturing has sustained the Swedish town of Linköping for a century. In the U.S., recent investments for missile production have turned the fortunes of Camden, Ark.
Other pockets in Europe see mixed results from military spending. The German arms manufacturer Rheinmetall abandoned plans to build a factory in Saxony after local opposition. Despite significantly increasing its defense budget, Poland lacks qualified military-industrial workers and has spent billions procuring and producing equipment in South Korea.
Bergerac, a medieval town of 27,000 people overlooking the Dordogne River in southwestern France, has been shaped by its production of two commodities: wine and military explosives.
After the Cold War, France ended centuries of gunpowder production, leading to thousands of layoffs in Bergerac. An aging population and lack of industry stymied Bergerac’s rebound from the 2008-09 financial crisis. It has since seen unemployment of around 15% or more, roughly twice the national average.
After the war began in Ukraine, the explosives manufacturer Eurenco invested 200 million euros, or about $230 million, to revive French gunpowder production at a government-owned site on the outskirts of Bergerac.
The factory now employs 600 people, up from 200 before the Ukraine war. Its annual revenue has tripled to €580 million from around €190 million over the same period.
So far Bergerac has seen little of that money, according to local officials. Many Eurenco employees come from out of town, said Christophe Fauvel, president of the Dordogne Chamber of Commerce and Industry. Much of the assembly process at the plant is automated or requires specialized engineering skills that aren’t present in Bergerac.
The town has felt the risk, if not the benefits, of being a cog in France’s military industry. Eight people were injured in a blast at the Eurenco site in 2022, less than 2 miles from the historic quarter where tourists admire a statue of the big-nosed playwright Cyrano, named after the town.
Illegal drones have been spotted circling above the Eurenco plant, leaving some newcomers in town to rethink their decision to relocate there from bigger cities.
“I would prefer that the jobs were created in schools and hospitals, that they put money toward health and education,” said Mathieu Brand, co-president of La Traverse, a community-driven cultural center.
Bergerac’s mayor, Fabien Ruet, said reviving the gunpowder plant was “a quick win” for Emmanuel Macron, helping the president appear responsive to Ukraine’s and France’s defense needs, but that Bergerac itself had been circumvented.
“Even our longstanding companies aren’t benefiting from the Eurenco effect today, even though there should have been a knock-on effect,” Ruet said. “We’re just spectators.”
Write to Sune Engel Rasmussen at sune.rasmussen@wsj.com