United took the lead through Dimitar Berbatov, but Everton fought back and won the game.
“We were well beaten, it’s as simple as that,” he told Sky Sports.
“Second half we were outplayed. Maybe we left something in Milan, we looked tired, but when you are going for the championship you expect Manchester United to respond to the importance of the game.
“We started the game well enough but the equaliser galvanised them and gave them an incentive. The second half they were better.”
“It was a bad result for us and at this time of the year you can’t afford results like that,” he added.
“We hope others drop points, and that can happen the way the league is going this season. Hopefully it turns out like that again. I don’t think we will panic.”