Keane watched United's 2-0 loss to Olympiakos in Athens on Tuesday night as a pundit on ITV, and while he also believes David Moyes will be "shocked" about a "lack of quality" in the players he is working with, he believes English clubs in general have declined.
"I think we’ve been brainwashed by the [idea that] the Premier League is the best league in the world. Nonsense," he said.
"It’s the best brand, but we’ve seen over the last few weeks with a lot of the English teams struggling that these teams have fallen behind the top teams in Europe, and United in particular."
Moyes' side mustered just one late shot on target against the Greek side, who were rarely troubled by the reigning Premier League champions.
And Keane says the United boss will privately be shocked that the team he inherited from Sir Alex Ferguson is playing so badly.
"I think David Moyes will be shocked," he added. "He went into United in the summer expecting great things, he’s probably looked at them at close quarters and I would say, privately, that he is shocked with the lack of quality that he is working with.
"It’s been a tough night for supporters and for Moyes and his staff. I don’t think anybody of us could’ve predicted that. They just never turned up.
"Let’s also give credit to Olympiakos, they were very, very good, they were on the front foot and technically they were better than United tonight."Keane also criticised Michael Carrick after the midfielder gave a television interview in the wake of the defeat.
"That interview was just like their performance: flat," Keane added. "Say a bit more, have a bit more urgency even in the interview, that just reflected it, flat, no urgency, they keep saying 'Next game, next game', for some of them there won't be another game, that's the reality for him."
After Keane's co-presenter pointed out that Olympiakos fans in Keane's close proximity may have been feeling sorry for him, the Irishman replied: "The fans were probably looking at me and thinking 'What's happened to Manchester United?'"