It's more that most European countries had little reason to spend money on defense. Until recently, Finland and Sweden were small countries close to Russia but outside NATO, and their defense spending was similar to West European NATO members. In other words, nobody saw any real military threats to Western / Northern Europe, and the NATO security guarantees had more political than military value. Then Russia invaded Ukraine, and the threat environment changed.

I'm less familiar with the situation in Eastern Europe. Many countries joined NATO as quickly as possible, because they understood the Russian doctrine and saw a real threat there. Russia tries to surround itself with puppets / friends / allies, by force if necessary, to avoid having to fight in its own territory. Many East European countries didn't want to be part of that so soon after the fall of communism. But it looks like the idea of being in friendly terms with Russia instead of fully committing to the West never went away.