Despite a commendable second half showing the Reds' were a goal short of qualification, leaving the midfielder to lament a first half performance to rank alongside Liverpool's worst of recent times.
And the England International says that the players are 'devestated' at being knocked out.
"We have to question our mental attitude at the start of the game.
"Physically we were fine - you could see that at the end of the game - and ability-wise we had the better of them, but mentally we weren't right in the first half.
"The difference between our first-half and second-half performances were amazing and to come in at the break 3-0 down was a catastrophe for us.
"That's something we have to look at and I'm sure we'll do that in the forthcoming games.
"We should have beaten Basel at Anfield and our failure to do that put us in that position where we needed to win this game. We failed to do that and we are devastated."