Pep Guardiola believes Liverpool have a claim to be the best team in the world right now.
The Manchester City boss and his team are trailing the Reds by seven points in the Premier League race, and welcome Liverpool to the Eithad on Thursday in a crucial game.
The encounter is being billed as a must-win game for City, as Guardiola admitted his team's title defence would have been over if they had not beaten Southampton on Sunday.
A 3-1 win restored some of City's confidence, but Guardiola warned his players that they are about to take on the world's in-form side on Thursday.
'The problem is the other team is fantastic,' Guardiola told BBC Sport.
'[Liverpool are] maybe the best team in Europe or the world right now and in top form.'
He added: 'You have to accept it. All we can do is do our job, play our games and after that we will see.'
Liverpool won every single one of their December games, while City suffered three costly defeats in the same period.
Despite a dream winter period so far, Jurgen Klopp has continually downplayed Liverpool's title chances, insisting it is too early to see a clear title winner.
'We are running a marathon and this is halfway,' he said after Liverpool's 5-1 thrashing of Arsenal.
'Our first target is to qualify for the Champions League and I don't feel we have done enough to be sure of that yet. All that matters is to be ready for the next challenge.'
City are sweating over the fitness of their midfield talisman Kevin De Bruyne after he missed the Southampton clash, while Liverpool are not expected to have any new injury concerns.