Balotelli became Liverpool’s ninth new arrival of the transfer window when he completed a move from AC Milan and is in contention to make his debut against Tottenham Hotspur on Sunday.
Allen is confident the Italian will be successful and has praised the club for being so active this summer rather than just being content to rest on the improved performances of last season.
Speaking about Balotelli, Allen told the Liverpool Echo: “I’m excited to work with him. He’s a player with massive quality.
“He has that spontaneous edge to him. He’s going to give us a massive threat. It’s a signing that is another great addition.”
Allen added: “It’s credit to the club and all the staff who have worked so hard this summer to strengthen the squad on the back of a positive season. It shows our ambition to take that next step going forward.
“All the additions have settled in quickly. That’s been a big positive so far. They’ve brought plenty of pace and they are going to be a big threat for us throughout the year.
“Our squad has great balance now throughout, strength in depth and there is certainly going to be competition for places in every area.
“Top players like playing with top players. It brings out the best in people.
“It’s great to have competition throughout the squad. It spurs everyone on to improve and perform at their best.”
Allen is determined to help get Liverpool back on track after a 3-1 loss to Manchester City on Monday, insisting there are still plenty of reasons to be positive.
He said: “We’re disappointed with the result, but all of us are excited going forward and we’re looking to bounce back with a good result at Spurs.
“City is a tough place for anyone to go to.
“We’ll analyse certain things, look to improve and look forward to going to White Hart Lane for another big game.
“It’s small margins at this level. It’s not just negatives to take away from the game but unfortunately we conceded three goals.
“They punished lapses in concentration.
“They were clinical. On the balance of play before the first goal it was pretty even but they put their chances away and after the first goal we were always climbing a mountain.”