Dalglish wrote in The Sun: "I don’t see the Champions League winners this season coming from the Premier League.
"Chelsea may have won it last term, but I don’t see an English side picking up the famous trophy at Wembley in May.
"Barcelona and Real Madrid are Europe’s top two sides and if they can avoid each other, that would be the dream final.
"Last season, when the two Manchester clubs failed to make it out of the group stages of the competition, it was an illustration of just how much English teams must improve to reach the level required to win the Champions League.
"When you have United and City out of the competition before Christmas, that’s an indication of how far English clubs have got to go, because they were the best sides in the Premier League last term, going neck-and-neck for the title."