The former Liverpool defender believes there will be a major overhaul at the Etihad Stadium this summer.
Manuel Pellegrini’s side were beaten 2-1 by Crystal Palace on Monday evening, leaving them nine points behind leaders Chelsea, who also have a game in hand.
That result has ultimately left their title defence in tatters, with it looking extremely unlikely they will be champions once again come the end of the season - given they have lost seven of their last 14 games, winning just four.
As far as Carragher is concerned, this is now the end of a great Premier League team and a time for change.
“We are watching a great team in the Premier League coming to the end,” said Carragher.
“It has to change. They have been a poor team in Europe. It's finished now.”
The former defender has also criticised those at the top of the club, accusing them of 'mismanagement' that has ultimately ended up damaging the club.
Manager Pellegrini recently admitted that the side will have to start signing young talent because the club’s academy prospects are not yet ready for first team action, according to the Daily Mail.
That has led to them being linked with several of Europe’s top youngsters and, as far as Carragher is concerned, that is down to poor leadership by those in charge of proceedings.
“Pellegrini said they haven't got anyone there to come through, so they have to spend again,” he added.
“The situation they were in, before FFP came in, I had visions of them getting the best young players around our country and in Europe, and they would be ready to step in. They haven't got anyone there. I think it is so poor from those at the top of the club, it is mismanagement from them.”