The Northern Irishman is confident the Reds will progress again next season but not enough to swiftly bridge the gap between themselves and the Premier League's top fourLiverpool boss Brendan Rodgers has warned fans not to expect huge improvements from his side over the summer due to a lack of money.
The Reds go into Sunday's clash with Chelsea 11 points behind their fourth-placed opponents and the Northern Irishman feels that it would take a massive investment in transfers to bridge the gap in one season.
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"It is simple: I just don't have the resources to go out and do that. What Chelsea did demonstrates the task we face in trying to make that step forward.
"I believe we will improve again next season but we will have to do it in a different way. We finished eighth last year and we might finish seventh this time. That might not seem like a lot but it is one step towards where we want to be.
"There is not going to be a big instant improvement. That is the reality. I think that, unless you can throw £100 million at it ... just look at Manchester City's story.
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"There is no point me saying I think we can win the league. It doesn't stop us wanting to win the league. It doesn't stop us being the very best that we can. It is just the reality of where we are."
Instead, Rodgers will continue to utilise the club’s bountiful youth system to develop new talent for his team.
"You can have the best academy in the world but if you don't have a manager who gives young players opportunities they've got no hope and no chance," he replied when asked about how the current Chelsea boss paved the way for his young players while in charge of the Reds.
"We've got potential - I think what you've got is a manager who will give them a chance.
"Every club takes youth development seriously. Manchester United and Arsenal are other clubs that put youth at the forefront. The academy here is good, with wonderful facilities, but what they’ve had this year is an opportunity."