Jurgen Klopp invested well during the summer, splashing out £175m on new players in an effort to challenge City for the title.
Liverpool are among the favourites to finish top of the pile and have started the season strongly, winning all four games so far and conceding just once.
Chelsea and Arsenal are in stages of transition following managerial changes while Manchester United are on the verge of crisis following a disastrous summer and start to the season.
City are expected to retain their crown but the loss of Kevin De Bruyne for two months is likely to hinder them.
And Saunders believes injuries to their rivals, as well as the addition of strength in depth, could put Liverpool in pole position.
“I think Chelsea are doing well but the backline’s not right yet,” he exclusively told Starsport.
“But Chelsea look going forward, they’re playing some good football, they’ve won four out of four.
“Liverpool, Man City and I think you can’t rule Spurs out completely.
“But it’s hard to back against Man City.
“If you had to pin me down, it’s hard to back against Man City but Liverpool have got a great chance if the likes of De Bruyne keep getting injured.
“If you take De Bruyne out of Man City for the season, how many points would they lose with him not being there?
“Or how many points does he win them with his assists and goals? So at some point with him being injured, it’s going to cost them.
“The first game of the season you looked at the bench, he brought on De Bruyne, (Leroy) Sane and (Gabriel) Jesus.
“They were the three subs he bought on, they get in everybody else’s team, all three of them.
“Liverpool’s bench, they used to have kids on there, now they’re starting to have a proper bench as well.
“Internationals sat on the bench and that’s what you need.”
Despite their disappointing start, Mourinho eased the pressure on him by guiding United to a win over Burnley prior to the international break.
But Saunders has backed the Red Devils to miss out on the Champions League places this season, alongside Arsenal.
He added: “I think it will be Man City, Liverpool, Chelsea, Spurs.
“Looking at it at the minute, It might change, it does change as you go along.
“I thought Watford would struggle, they’ve won the first four games.”
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