On Sunday, the Three Lions will take on La Roja in Berlin.
Southgate's team is on their way to Berlin for their first major event final away from home, having defeated the Netherlands on Wednesday night thanks to Ollie Watkins' dramatic late winner in the semi-final.
While England has been reluctant to warm up to the tournament, saving their finest performance for the Dutch following a sluggish group stage, Spain has looked like the summer's strongest squad since the first round of matches.
Luis de la Fuente's men defeated pre-Euros favourites France in the last four on Tuesday after defeating Croatia and holders Italy in the group stage, as well as hosts Germany in the quarter-finals.
With La Roja also benefiting from an extra day's rest before the final, Southgate insists England has no margin for mistake if they are to improve on their final defeat to Italy at Euro 2020.
"They would be rightly favourites for what they have done this tournament," Southgate told the BBC. "They've been the best team." They have an extra day, and that has been pretty significant in the last three finals, if not more, so we must get our recovery in order. We'll have to be tactically perfect because they're such a strong team.
"They are a bloody good team. Let's pitch it correctly. To win this game, we must be perfect, and we must draw on everything we have within us."
Southgate's replacements were perfectly timed, with Watkins and Cole Palmer coming off the bench to combine for a 90th-minute winner in a 2-1 victory over Holland.
The 53-year-old has been heavily criticised at times this summer, and was even targeted with plastic cups thrown by fans after the drab 0-0 draw with Slovenia last month, but when asked about any sense of personal vindication, he shifted focus to squad players such as Watkins, who had made just one 20-minute cameo appearance in the previous five games.
"We're in our first ever overseas final," Southgate continued. "I am happier for the players who have come in and had their moments. That's the key.
"When someone trains as consistently as Ollie does, the entire group benefits. Despite the fact that when you pick a team, you leave 15 people out, none of them have dropped their heads. It is difficult to continue, but we have a tremendous amount of strength."
At full-time, Southgate shared a moment of joy in front of England's fans, recalling his impassioned salute after the 2018 World Cup penalty shootout win over Colombia.
"I am delighted for the supporters here," he told reporters. "They were magnificent, but they appeared to be massively outnumbered based on the colours. But, when we have the supporters with us, like they are right now, the enthusiasm and boost it provides to everything is enormous."
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