Pat the lamb dry and season it with salt and pepper. Heat the olive oil in a large Dutch oven over medium-high heat and brown the lamb in batches until all sides are seared. Remove the lamb and set it aside.
Lower the heat to medium and add the pearl onions and carrots to the pot. Cook for 5 minutes until the onions start to soften and the carrots pick up some color.
Stir in the garlic and cook for 1 minute. Sprinkle the flour over the vegetables and stir for another minute to coat everything.
Pour in the Cabernet Sauvignon and scrape the bottom of the pot to release any browned bits. Add the beef broth, tomato paste, thyme, and bay leaf, then return the lamb to the pot.
Bring the mixture to a simmer, cover, and cook on low heat for 1 hour and 45 minutes until the lamb is fork-tender. Remove the thyme sprigs and bay leaf before serving.
Taste and adjust salt and pepper if needed. Sprinkle with chopped parsley right before serving.