Newcastle United are facing a crucial period in which the future of Rafael Benitez will be resolved and the transfer window reopens, when the club cannot afford to make mistakes, says the Spaniard.

The season concludes this weekend at Fulham with the Magpies’ final league position somewhere in the bottom half of the table, 13th, 14th or 15th.

Although that means the Premier League next season, survival is not enough to satisfy Benitez, he strives for greater achievement more and there have been occasions this season when his team have given an indication of what is possible at St James’ Park.

They beat Manchester City in January, and on Saturday lost 3-2 to Liverpool by conceding a late goal scored from a hotly-disputed free-kick.

Asked how far away his team is from being able to compete more regularly with the best of the Premier League, Benitez said: “I think we are getting better.

“In terms of how many players we need? To get close to the top six if very difficult, you have to be sure the characters you buy are right – you cannot spend £50m on one player. Maybe you have one for £5m who can do similar things.

“This will be a really important transfer window for this club. It will be really important not to make mistakes.

“I am really proud and pleased to stay up but I would like to compete for something more, so hopefully we can match the ambitions of the fans.”

He added: “This is a massive club, everybody wants to see it competing and it’s so clear the potential is here. You don’t have to spend £200m, it’s a question of doing things at the right moment and the right way.

“If we can go first with the right money, then you can convince a player. But if a player is offered double the money he will go there. They are professionals. We have to do things quicker, we have to do things right and then we can compete with some of the other teams. The problem is that some of them spend £150-200m and they are 7th-13th and they pay £100,000 a week. That’s what we need to understand.

“How far can we go and in what way? If we do it right, then we can compete in this tranche of tenth, whatever.”

Benitez is widely-regarded as a coach who can maximise the potential of individuals to produce a team to become greater than the sum of its parts.

He concedes, however, that if the players at his disposal are of a better standard then he could achieve even more.

“If you have better tools then maybe you can go two positions higher, two positions,” he said. “You can compete, 7th to 15th. If you have better squad you can be more consistent. We lost Almiron, it’s very difficult.

“You can get to a certain level, after that you cannot. Each has its own level of efficiency. If you look at Formula One, if you are at bends, you can fight. But in a straight line they go past you. You can be the best driver in the world, it doesn’t matter. So you drive in Monaco, where it’s bendy, then you have a chance.”

It was made clear to Benitez that he remains wanted by the Tyneside public, supporters chanting for him to stay throughout Saturday evening’s encounter.

The ball appears to be in owner Mike Ashley’s court. Benitez added: “We have had conversations and will have conversations in the next couple of weeks and then see where we are.

“It is so simple. We have the potential you can see the potential, you can feel the passion of the fans and what this club means to them.

“We have to try and compete with the teams that are around us and at the moment it is not easy.”

Benitez joined his players on the St James’ pitch during a lap of appreciation after Saturday’s match. Asked if it felt like farewell, he said: “No, I’m feeling that today is a good day in terms of what we did on the pitch, very emotional in what you could see around. That’s it.

“I’m not negative, or too positive in terms of the conversations on the future. I think that the fans, they want me to stay. We have to be sure we have the tools to compete at the level we want to compete.”