Scholes was asked about the upcoming Liverpool vs. Arsenal Premier League game on Sunday.
While he admits the contest will be a close one, he believes the Anfield club are bigger challengers to Manchester City at present than Arsenal.
On Stick to Football, by Sky Bet, Scholes stated: “I think Liverpool’s squad is better than Arsenal’s. I think Pep Guardiola will be more worried about Liverpool than Arsenal.
“Liverpool’s midfield have got legs. When they played against United at Old Trafford (in a 3-0 win), I thought: ‘Wow, they look like a fit team’ and there’s quality with it as well.
"The three in the middle of the pitch with the forwards they’ve got in front of them, it doesn’t matter (who they’ve got in midfield) – it’s that saying 'you’re only as good as your forwards are’. They’ve got five or six forwards who are special. That middle of the pitch doesn’t become as important.
Scholes added: “If you want to win leagues, you have to win these big games. You have to win against your rivals. (Manchester) City was the same last year – (Arsenal) went to City last year and got a draw and celebrated it. That was the time to go and win the league.
“Without the sending-offs, Arsenal haven’t been great anyway. (The midfield) is not flowing, like it was last year. (Having no Martin) Odegaard could be a big issue (against Liverpool)."