UPDATE 1-Italy budget will include basic income, lower retirement - Tria

Italian Economy Minister Giovanni Tria said on Wednesday the country's 2019 budget will include a basic income for the poor and allow people to retire earlier, meeting demands from the ruling coalition parties.

Tria told a retail association conference the so-called "citizens' income" will help manage the social consequences of technological change, and said allowing people to retire earlier will give firms a younger, more skilled workforce.

The anti-establishment 5-Star Movement, which governs with the right-wing League, on Tuesday threatened not to vote for the budget unless it included the citizens' income and a lower retirement age, along with other measures.

On Thursday the government will present its economic and financial targets that underpin the budget, which must be approved by the cabinet and presented to Brussels in mid-October.

Financial markets are banking on Tria, a former academic who is not affiliated to either party, to keep a lid on public finances and water down some of the big-spending plans of the coalition that took office in June.

Italy's public debt is the highest in the euro zone after Greece's as a proportion of its GDP.

In his speech, Tria tried to strike a balance between promising a growth-friendly, expansionary package while maintaining the confidence of markets and avoiding a head-on clash with the European Commission.

"We are working at a mix of policies that show everyone they should have confidence in Italy, not only in our public finances but in our economic growth," he said.

Italy has been the most sluggish economy in the eurozone since the start of monetary union almost two decades ago and the number of people living in poverty has tripled in the last 10 years.

The updated targets will "send a message to markets on the sustainability of our debt," Tria said.