Heat the olive oil in a large skillet over medium heat. Add the shallots and cook until fragrant, about 2-3 minutes. Add the mushrooms and season with a large pinch of salt and pepper. Cook until browned and reduced, about 10-15 minutes.

While the mushrooms are cooking, bring a large pot of salted water to a boil. Add the gnocchi and cook according to package directions until just al dente. Reserve 150 g of pasta cooking water and drain the gnocchi.

Reduce the heat to medium, then add in the thyme, sage and cook another minute or so until fragrant. Add in the butter, balsamic vinegar and 150 g reserved pasta water and cook to form a sauce. Add in the cooked gnocchi and stir until combined. Add in the basil and stir until combined. Season to taste as needed with salt/pepper and red pepper flakes, if using, then serve.