The England boss namechecked the young Gunners pair as he expressed his delight at the increased opportunities given to homegrown players.
Saka has emerged as one of Arsenal’s most important players with six goals and five assists in 2020/21.
Smith Rowe, meanwhile, has been a revelation having made his first-team breakthrough this season after a successful loan spell at Championship club Huddersfield.
Southgate joined talkSPORT’s Sports Breakfast show for an exclusive hour-long interview on Tuesday and expressed his delight at the array of young English talent thriving in the Premier League.
Phil Foden, Reece James, Callum Hudson-Odoi, Curtis Jones and Tariq Lamptey are among a host of other promising domestic players to have impressed in the top-flight this season.
“Eighteen or so months ago, every Saturday we were about 30 per cent of the league, English qualified players,” said Southgate.
“This year that’s up to 40 per cent and that doesn’t seem like a lot, but when you think that the likes of perhaps an Emile Smith Rowe getting his opportunity at Arsenal, we know those kids are there, we know the talent is there.
“But of course, when the buying and spending power of the clubs is greater than anything around Europe and the pressure is on to have immediate success, it’s much easier and quicker to go and buy a finished product from abroad, who’s got a handful of a couple of seasons behind them.
“So there was always this blockage for young English players going in. Now, they’re getting their chance and showing [what they can do].
“The boys at Arsenal for example, Saka and Smith Rowe, have been a huge breath of fresh air in their team. There are more across the country if they get the opportunity.”
Southgate will have a tough job picking his squad for this summer’s European Championship, particularly in the attacking areas.
Foden, Jack Grealish, James Maddison and Mason Mount are among the players pushing for an attacking midfield sport.
Southgate admits he is facing some ‘big decision’ but is excited by the options at his disposal and believes fitness will play a major part in his calls.
“When you’ve got a choice of some outstanding talent, now of course there’s big decisions you have to make,” he added. But in the end, you know, some of these decisions are sadly taken out of your hands.
“I mean, if I look at the squad for March we’re already without Joe Gomez, Jordan Henderson, Harvey Barnes. James Justin, who we think has been doing exceptionally well at Leicester, is going to be out.
“So, you know, how many of these guys (are available)? There’s others who aren’t playing at the moment.
“And then actually it’s just a case of ‘right, who’s playing the best’. Who do we think has the pedigree, who’s performed at the high level before coupled with who’s in the form, who fits into the way we want to play with and without the ball?
“So, yes, of course there’s a lot of talent in those attacking areas, but what’s really exciting is that for years we’ve talked about development in English football and where are the creative players, how do we develop those types of players.
“We’ve had root and branch reviews of everything from, you know, grassroots football to academy football to everything for decades and we’ve now (got them).
“I think huge credit to the clubs but also even junior football. When I go and watch junior football played on the local parks we’re able to see the style that kids play, the skill level.
“You go into the cages in the inner cities and see the talent. There’s raw talent and there’s a different type of player, a different skill level coming through which is hugely exciting.”