And he believes that, with reinforcements, this Chelsea team can do what he and his team-mates did in 2012 – and lift the Champions League next season.
The 36 year old, who will depart on a free transfer this summer and is considering offers from Bournemouth and West Brom as well as opportunities in China and the Middle East, watched from the bench as his side’s dreams of a coveted Double were dashed in defeat by Arsenal at Wembley.
But Terry believes City’s capture of Monaco playmaker Silva for £43million on Saturday is a warning that Chelsea need to get going on the business of adding to their title winning squad – and fast.
“Man City have already made one big signing. We need to act fast and I’m sure the club will,” he said. “You can’t stand still in the transfer market. We have to keep improving year after year. Everyone needs to keep raising the bar. The manager stressed that himself.”
John Terry insists Chelsea must respond to Man City's early transfer activity
Chelsea manager Antonio Conte, who will take a couple of days off before signing a new £9.6m-a-year contract next week, admitted work will begin soon.
Depending on what happens with striker Diego Costa, Chelsea are looking for at least one more striker – with Everton’s Romelu Lukaku their chief target – a midfielder – with Monaco’s Tiemoue Bakayoko high on their list – another centre-back and a wing back.
Conte will be handed a transfer kitty of some £200m in order to do those deals.
Terry said: “This team is a great group. They are really stepping into the shoes myself, Frank Lampard, Didier Drogba and Pete Cech have left. They are ready to start mixing it with the best.
“Champions League football can be the attraction for signing bigger and better players. This current squad is good enough to compete in all competitions at every level.
“But there are going to be more games next year so the squad needs improving and more strength in depth.”
Terry cleared out his locker at the training ground this week and admitted it was an emotional time after 22 years at the club. He will take a week off and make his decisions about his future after a break.
He said: “I need a good week away just to reflect. It doesn’t help because it was heart-breaking going out like that and losing.
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Bernardo Silva has joined Manchester City for £43million
“It’s the last time probably at Wembley as a player. Hopefully one day I’ll be back as a manager. If I do stop or if I do carry on playing, I will press on in with my coaching badges regardless.
“I do want to be a manager. I’ve got too much to give and I’ve learned too much not to pass that on. The target is managing a top side.
“But I am going to have a week away and decide. I can then start planning. I’ve not got anything sorted.”