In a large Dutch oven over medium heat, cook diced bacon until it's crispy and golden, about 5-7 minutes. Remove and set aside, leaving the fat in the pot.

Pat the beef cubes dry and season with salt and pepper. In batches, brown beef in the bacon fat for 12-15 minutes.

Remove beef and add onions and carrots to the pot, cooking for about 8 minutes. Stir in garlic and tomato paste, cooking for an additional minute.

Sprinkle flour over the vegetables, stir well, then pour in the red wine while scraping the pot. Add beef broth and herbs, returning beef and bacon to the pot.

Preheat oven to 325°F (163°C). Cover and braise for 2 to 2.5 hours until fork-tender.

Sauté pearl onions and mushrooms in a separate skillet for 5-7 minutes. Stir into the stew and let rest for 10 minutes before serving.