Chelsea boss Jose Mourinho values Belgium playmaker Eden Hazard at £200m after reported interest from Real Madrid.
Alan Pardew is weighing up chasing a big-name summer signing to boost Crystal Palace's profile.
Southgate, who begins work immediately, succeeds Stuart Pearce, whose contract was not renewed by the Football Association following a disappointing European Championships campaign in June.
Southgate said: "I'm delighted to get this role and extremely excited about the prospect of working with the best and brightest young players in the country.
"I'm a proud Englishman and playing for my country was the pinnacle of my playing career.
"Since retiring as a player I have gained a lot of knowledge and experience of the game both here and abroad, and I'm eager to play my part in preparing players to compete at the highest level.
"Whenever any team steps onto the pitch for England, being successful is of huge importance, but it is also about developing a clear style of play that can allow our talented young players to flourish."