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Melbourne City need to improve if they are to beat the Victory - Van 't Schip

John van 't Schip says Melbourne City must make significant improvements to be competitive in this weekend's Melbourne derby, after lack of spirit and urgency left his A-League side wanting against Newcastle Jets.

High-flying City's derby preparations took a downward turn with their shock 2-1 defeat to strugglers Newcastle at Hunter Stadium on Sunday.

Despite falling victim to two questionable decisions, City lacked the usual attacking spark that has yielded them 11 goals in their last four games and a stunning league-high total of 44.

Competition top-scorer Bruno Fornaroli netted a late consolation to lift his personal goal tally to 15, though the improved Jets had already done the damage against a flat 10-man City.

It was in stark contrast to December's 4-0 away game at Newcastle in December, and one Van 't Schip said was simply not good enough for a team hoping to challenge for the title.

"We always come to expect to win, that's our goal," he said. "But to achieve that you have to have a spirit and urgency in your way of playing, and then the quality can rise above. That was not the case.

"We have to improve a lot if we want to have an impact next week [against Melbourne Victory]. I still have the confidence, and the quality in the team is there.

"But if we don't work and fight together, and just think it's going to happen by itself because we have some quality, then it's not going to work. We have to do it all together, everyone."

The result renders Saturday night's mouth-watering third Melbourne derby even more important, with City still in third spot but on equal points with Kevin Muscat's fourth-placed side, who only managed a draw against in-form leaders Western Sydney at Etihad Stadium.

Both are now six points adrift of the Wanderers and Brisbane.

Anthony Caceres will be back from suspension though Van 't Schip will have to make do without Jacob Melling, who was sent off in what the coach described as a "very soft" 64th-minute red card for bringing down Newcastle's Morten Nordstrand on his way to goal.

It only compounded City's woes, after a dubious handball decision against Jack Clisby allowed Milos Trifunovic to roll in the opener off a penalty -- his first of two goals.

One of Van 't Schip's main priorities will be tightening up a leaky backline that has now conceded 33 goals in 18 games -- the league's second-worst defensive record only behind bottom-placed Central Coast.

Socceroos centre-back Alex Wilkinson will soon be able to add his experience, having signed late last week.

Van 't Schip said he would assess Wilkinson when he starts training with the team on Tuesday, and make a decision on the 31-year-old's involvement against Victory.