The Arsenal boss feels that English clubs are now expected to overspend on new players, which will eventually lead to disaster

Arsene Wenger believes there are two separate transfer markets developing and warned Premier League clubs that their high spending will eventually lead to the loss of their financial advantage.

Arsenal have been criticised for a transfer window that has only seen them add Granit Xhaka, Takuma Asano and Rob Holding as their squad struggles to cope with a host of injuries.

Manager Wenger has seen pursuits of Lyon striker Alexandre Lacazette and Valencia defender Shkodran Mustafi as yet come to nothing, but he feels Arsenal are right not to pay huge fees and thinks such a policy would backfire in the long run.

"You could say that today in Europe you have two markets - one for the English clubs and one for the rest of Europe," he said at his pre-match media conference ahead of Saturday's trip to play Premier League champions Leicester City.

"The danger of the English situation at the moment is that the English clubs can suffocate themselves in the long term. Why? Because they buy players at a very high price. That means there are very high wages linked with it and if they are wrong, they will have these players with high wages who cannot move anywhere else.

"You start the first period now of English clubs having to pay massive wages. Even when the players go out, they have to pay their wages. In the long term, that will mean that the financial advantage the English clubs have will drop because they will be on their wage list. They pay for 10 or 12 players who have gone somewhere else because the clubs they go to cannot pay their wages.

"We do not talk about individual players. I told you already about the criteria for the price of a player but you could add one more: the identity of the buyer.

"When the buyer is English, it is true that it multiplies the transfer by two or three or sometimes by 10. If for the same player an English club does not come in, he is worth £5million, but if an English club comes he is worth 35 or 40 or 50."