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Manchester City are planning to spend heavily in the transfer market this summer - but one potentially world class recruit could be heading to the Premier League champions for nothing.

Jason Denayer has been tipped to be good enough to play for Real Madrid one day.

The Belgian international returns from a season-long loan at Celtic in the summer, ready to push for a place in Manuel Pellegrini’s first team squad.

The 19-year-old has impressed in Scotland and Celtic are keen to extend his loan to next season.

But City are understood to be keen to bring him back to the Etihad to see if he can challenge Vincent Kompany, Martin Demichelis and Eliaquim Mangala.

Belgian World Cup legend Lorenzo Staelens believes he is good enough to do that an more.

“Jason Denayer is a diamond and will be the future of the Belgium defence for years to come,” said Staelens after the teenager made his international debut against Israel last month.

“I remember when Vincent Kompany made his debut for Belgium and he was praised for his maturity, well Denayer looked even better.

“It’s still too early to say he’s the new Kompany.

“But when I see the likes of Raphael Varane playing for Real Madrid, Denayer is already at that level and will pass it in no time if he keeps developing.

“I see him very soon being at a club like Real Madrid.”

Denayer’s development at Celtic is a welcome boost to City, who plan to overhaul their squad this summer with youthful additions.

Pellegrini admitted at the start of the month that City’s academy players were still too raw to make the breakthrough to the first team. Despite seeing the club’s next generation reach the FA Youth Cup final, Pellegrini believes he will have to spend to rise to the challenge set by Chelsea this season.

Young English talent like Ross Barkley, Raheem Sterling and Jay Rodriguez are on City’s radar, along with foreign stars like Paul Pogba and Kevin de Bruyne.

Denayer’s return could pave the way for Dedryck Boyata to head in the opposite direction.

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The 24-year-old has failed to establish himself at the Etihad with Kompany, Demichelis and Mangala all ahead of him.

Denayer would be another obstacle in the way of his first team ambitions. Boyata admits he may need to leave the Etihad to progress his career.

He said: “I am playing in a big team, but for myself it’s not good enough. People here have seen what I can do, but I am not getting the chance every weekend, so I see myself going somewhere that I can play.”