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Prepare the Beef:
Pat the beef dry with paper towels and season with salt and pepper.
Cook the Bacon:
In a large Dutch oven or heavy pot, cook the bacon over medium heat until crispy. Remove and set aside, leaving the fat in the pot.
Sear the Beef:
Heat olive oil in the same pot. Sear the beef in batches until browned on all sides. Remove and set aside.
Sauté the Vegetables:
Add the onion and carrots to the pot and cook for 5–7 minutes until softened. Stir in the garlic and tomato paste, cooking for 1 minute.
Deglaze the Pot:
Sprinkle flour over the vegetables and stir well. Pour in the red wine, scraping up any browned bits. Let it simmer for 5 minutes.
Simmer the Stew:
Return the beef and bacon to the pot. Add the beef stock, bay leaf, and thyme. Bring to a boil, then reduce heat to low and simmer, covered, for 2 hours, stirring occasionally.
Cook the Vegetables:
In a skillet, melt the butter over medium heat. Sauté the pearl onions and mushrooms until golden brown. Add them to the stew during the last 30 minutes of cooking.
Remove the bay leaf, adjust seasoning, and serve hot with mashed potatoes, crusty bread, or buttered noodles