Allen, who is currently on the Reds' tour of America, thinks England's loss will prove to be Liverpool's gain this season.
He said: "It's a huge loss from England's point of view, they are losing an iconic player, but people will remember what he has done for them. He has been an incredible servant for the nation.
"But it gives him the chance to get his recovery in and be 100 per cent focused on Liverpool. As bad as it is for England as a nation, it's a good thing for Liverpool Football Club."
Allen remains confident that Liverpool will have a good 2014/15 season in the Premier League and Champions League despite suffering the blow of losing star striker Luis Suarez.
The midfielder said: "He is a world class player so naturally it's a big loss and we will miss what he brought, he was a key member for us and has been for the last few seasons. In football players come and go and we will have to move on and look forward to the new players who come in.
"He is a one of a kind as a player so like for like I don't think you can find a straight replacement, but the club have been keen to re-invest the money they got from that transfer and it will hold us in good stead and improves us for the start of the season.
"Despite the new lads only being here for a short while you can see they are settled into things well, they look hungry and ambitious to do well.
"There will be more competition but that is always a great thing to have in a team.
"There is a huge buzz, Liverpool have a huge history in that competition (Champions League) and are a club that belong in it, it was a great thing to qualify last season."