The Red Devils claimed derby bragging rights at the Etihad Stadium on Saturday, with a Paul Pogba-inspired fightback from two goals down allowing them to delay a Premier League title party.
City will, however, secure the crown at some stage, leaving United and the rest of the chasing pack trailing in their wake.
Giggs acknowledges that Jose Mourinho has a big job to oversee if an Old Trafford challenge is to be sustained in 2018-19, with it vital that the right additions are made in order to counter the ongoing development which will be made by noisy neighbours.
The United legend told Matchday Live on Star Sports: “They have to [improve]. They have to next year, they have to do that.
“Otherwise, City will win the league again, because of the quality that they’ve got, the transfer window, they’re going to improve, they’re going to get better players.
“Every season, whoever wins the Premier League, the teams beneath them have to improve.
“So Manchester United have to next year.”
United are already being linked with several high-profile signings, with more funds set to be made available to Mourinho.
City, though, will also be looking to strengthen after dominating the domestic scene in 2017-18.
The Red Devils will need no reminding that they cannot afford to fall short again, despite the claims of their manager being happy to settle for second this term, and Giggs’ words will have to be heeded when the next recruitment window presents itself.