Alan Boyce, managing director of Toni & Guy Ireland, said the decision to close its salon at Wellington Place had been taken because of a " hefty increase" in rent and rates bills.

He said this had contributed to an "unsatisfactory financial performance in recent months" at the outlet, which closed its doors before Christmas.

According to Mr Boyce, no jobs were lost, because the salon has now been amalgamated with an existing Toni & Guy academy on the Lisburn Road.

He said customers had reacted positively to the move and had welcomed the fact that car-parking was free in the suburbs.

A spokesman for Toni & Guy in London said the success of its salons no longer relied on securing a presence in the centre of Belfast, and cited the growing popularity of an outlet in Lisburn which opened nine months ago.

Joanne Jennings of Belfast City Centre Management said that increasing rents in the city centre were a sign that confidence was growing in the city centre.

But she said the loss of Toni & Guy highlighted the need for the Government to back initiatives to maintain small boutique style shops and cafés.

Glyn Roberts of the Federation of Small Businesses said that increasing rent and rates bills were a key issue for businesses.

He said the FSB had highlighted the problem in its recent submission to the Chancellor of the Exchequer in which it called for a Rates Reinvestment Fund which would cut rates bills for small firms by up to 50 per cent.